Challenges in the Commons against the new 20% VAT rate have been defeated by the government with comfortable majorities. Once announced, it was always going to happen, and even Alastair Darling has admitted that he'd have considered a rise from 17.5%.
But the reason why it was inevitable is because no one likes it. Why? Because it catches all. If you spend money in the UK, even if you're an expat with your money stashed away in an offshort tax haven, you will pay the increase.
Forget the Labour complaints about low paid people suffering, this is the fairest way by far of raising additional revenue to address the deficit. Food and children's clothes are exempt, and domestic fuel is at a reduced rate. But that new LED TV will cost more.
Do I like it? Not at all, neither did I like Labour running up deficits during the boom time from about 2002 until 2008, when it should have been running a surplus and paying off government debt.
And compared to other EU countries, it's about average:
http://www.tmf-vat.com/vat/eu-vat-rates.html
Creature would have been inclined to whack VAT up to 22.5% but he can be very skinflinty when he wants to be.
Politically I agree it is the best we can do in difficult circumstances. I put from my head thoughts of playing "Great Britain Ltd" on the Spctrum/BBC Micro and raising the VAT rate to a high level. I will see if I can dig out the notes and post the results quote so we will know what to expect. It wasn't pretty I seem to remember.
Adminstration wise it is a nightmare. Two rates (15 and 17.5) is just about manageable. A third rate (20) is much more problematic. We have never had three rates running within the same work lifetime before.
It does some overly complicated to have so many rates. I've no idea if it will help. I think one of the arguments against this kind of thing is that if people don't buy things the economy gets worse. That's probably true, but weighing up the effects is beyond me.
Of course the thing to do is not get in debt in the first place. It's much easier to stay out of debt than to climb out.
Creature says that by the time that the 20% comes in it will be a year since the 15% was stopped.
By 1.1.2011 there should be hardly any invoices at 15% - if there are, it means that something has Gone Wrong with somebody's invoicing procedures, or they are having an almighty haggle and dispute with a customer over wot price should be paid for the supply.
Anyway, Creature will be able to cope with it.
Wergh.
You can bet that as soon as the 20% rate has been installed and the 15% removed so we only have 20% and 17.5% available, that a year old invoice will turn up the next day.
There is a law of the universe that says so, just like as soon as you throw something out after 7 years you find a use for it and no longer have it to use.