Cutting standard VAT rate as Coronavirus stimulus

odyssey06

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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.
 

NoRegretsCoyote

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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.
 

mathepac

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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.
 

mathepac

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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?)
 

odyssey06

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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.
 

WolfeTone

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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?
 

odyssey06

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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?
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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