# Cutting standard VAT rate as Coronavirus stimulus



## odyssey06 (23 Jul 2020)

Posting in the Economic Issues thread as it mainly relates to the economic side of it rather than public health concerns.

The standard rate of Value Added Tax (VAT) is being reduced from 23% to 21% for six months from 1 September this year.

I find this a little strange given that people have been spending in supermarkets all along, and this cut affects their sales also.
Plus that period also includes the Christmas shopping spree time.

But interested in hearing other people's opinions on it.


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## Pinoy adventure (23 Jul 2020)

It's not much of a drop too be honest.
But any drop is better than no drop


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## NoRegretsCoyote (23 Jul 2020)

It's a super-dumb policy. There is plenty of demand, incomes haven't dropped nearly as much as consumption has.

It's just a free gift to retailers, many of whom don't need it.


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## mathepac (23 Jul 2020)

There's a whole heap of stuff they could have done better or differently.

13.5% down to 9% or even 10% for services
23% down to 20% (it would seem less niggardly)
For EV sales, if they're serious about making us change, 10% VAT on sales and 0% on the VAT to power them.

Leave fags, booze  alone at 23% or raise to 25% (possible negative, incentivise smugglers?)

Initial thoughts only, bemused by the lack of thought and creativity displayed, but not surprised. We have to pay the wages of the new super-junior ministers and all the extra advisors and family members now feeding off the State tit.


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## odyssey06 (23 Jul 2020)

mathepac said:


> Leave fags, booze  alone at 23% or raise to 25% (possible negative, incentivise smugglers?)



They want to bring in minimum alcohol unit pricing so they arent concerned about smugglers... or home brewers!


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## mathepac (23 Jul 2020)

They've "wanted" to do that for some time now, where is the legislation? (should is add a preposition to the end to placate our non-English speaking American viewers?)


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## odyssey06 (23 Jul 2020)

mathepac said:


> They've "wanted" to do that for some time now, where is the legislation? (should is add a preposition to the end to placate our non-English speaking American viewers?)



I believe the legislation was passed but not activated ... waiting for North to do likewise.
It is a saga in itself so I wont derail this thread by defenestrating it.


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## WolfeTone (25 Jul 2020)

I'm confused at the six month period... sounds like a time frame picked out of the sky. 

Also I'm confused at Paschals statement 

Retailers may not be able to pass on full amount. 

Correct me if I'm wrong, but if a product is to retail for €100, a 23% Vat rate is added with final cost to consumer of €123. 
So if Vat rate is to be 21% then final price is €121. 
What's not to pass on?


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## odyssey06 (25 Jul 2020)

WolfeTone said:


> I'm confused at the six month period... sounds like a time frame picked out of the sky.
> Also I'm confused at Paschals statement
> Retailers may not be able to pass on full amount.
> Correct me if I'm wrong, but if a product is to retail for €100, a 23% Vat rate is added with final cost to consumer of €123.
> ...



I don't think they operate that way, not on the prices which magically end in* .99*
So I think the implication is that businesses are paying 23% at the moment to the government but they are retrospectively calculating that from a sale price.
Businesses in trouble won't cut prices rather they will keep 2% for themselves.
I can't imagine that relates to grocery or off lience type shops who have seen an increase in business with the restrictions... perhaps it means other retailers.


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