The Tories have never cut vat. They introduced it as part of the EU package at 10%. When Labour left office in 1979 it stood at 8% The first Tory budget put it up to 15% (they'd denied they'd double it in the campaign and they didn't

) They then increased it to 17.5% in 1990, where it stayed until the temporary cut in 2009. This cut was decried as useless by the Tories and Lib/Dems but IMO did more to stimulate growth than any other measure Labour took in that period. Almost the first thing Osbourne proposed was a VAT increase to 20%, The result is what we've now got.
The Tories believe in low taxes - but low income taxes which benefits the better off more than low VAT benefits them. It seems to me that it's an ideological thing with them. But the time for ideology is rapidly running out. Time for some pragmatism. We're up s h i t creek time to look for the paddle.

This is a very good point and I believe "major hound" hit the nail on the head when they said it was for ideological reasons they cut income tax and not VAT.

[url=http://www.telegraph.co.uk/finance/economics/9339754/Cable-calls-for-state-support-to-boost-new-house-building.htmlVince Cable calls on government to stimulate housebuilding[/url

Someone should remind the dopey old fooker he IS part of the government

What Cable is suggesting would have to be agreed between Treasury and Dept for Communities & Local Govt (Eric Pickles), its not something he could control in BIS. So Cable is saying this in public to try and put pressure on his colleagues, he has probably already been telling them this in Cabinet.

At least Cable is speaking out a bit and not just being a toady parroting the government line.

Wouldn't it be better if he was more forceful in presenting his views to Cabinet and getting them implemented, rather than constantly appearing like an embarrassing old uncle that everyone has to make excuses for?

Maybe he and Brown could form the a new party called "Brilliant but Bonkers"? The Monster Raving Loony party is old hat (literally) now and needs replacing something more pertinent to the current world situation.

There is of course collective responibility where the Cabinet is concerned. Cable's line is "things'd be a lot worse if it wasn't for me" Bear in mind that Cable is a former member of the Labour Party and as such is probably still at heart a social democrat. I wouldn't be surprised to see him do a "Hesletine" but he'll probably pick the moment he can have most effect.

Yes - Alastair Darling cut VAT to 15% for a year in 2009 but when the Tories came in they were quick to say that the cut in VAT 'made no difference' hence they hiked it up even higher than it had originally been. But of course when it comes to higher taxes for top earners, they are full of warnings about how this will devastate the economy because all the rich will go to Switzerland etc.

The Office for Budget Responsibility analysis released at the time of the election said that they estimated 48% as the optimum upper tax rate, which begs the question if Osborne was cutting from 50% why not choose 48% rather than going to a sub optimal rate of 45%...

I expect over the next few years we will see a similar story - the top 1% rich increase their wealth disproportionately whilst the other 99% become relatively poorer, as there is never any real evidence of 'trickle down' effects, but the argument then will be that the reason it isn't trickling down is because top tax rates are too high, and wages at the lower end are also too high, and you need to cut taxes for the top earners and allow wages at the bottom end to adjust downwards and THEN you will see some trickle down effects....

I'd expect to see quite the opposite over the medium term. Low wages for the majority stifles demand and over time causes the rich to lose out.

So the rich will be campaigning for a 'living wage'. I look forwards to it because their strong lobbying power might see it be delivered.

And you can add to that another excuse for the economy not picking up that employ laws are too restrictive and what we really need is "reform" making the labour market more flexible which is euphemism for making everyone fearful for their job and for wages to be driven down further as a result.

I used to associate the word "reform" with good things. Reform of bad practice, stopping child labour and so on. These days whenever anyone says a phrase like "Reform of the labour market" you just know they really mean the erosion of hard won and [unecessary[/u rights that [iwill[/i lead to abuses.

Osbourne



Tim Nice-But-Dim


i do wish this hadn't been pointed out to me.