Saturday, January 03, 2009

Clegg joins attack on VAT waste (BBC)

The political parties have taken every opportunity to criticise the Brown / Darling VAT plan. On the face of it you may think the whole thing is too small to make a difference but scientific studies have been done on whether it is better to give tax back as a big lump or as small amounts. I wrote about the research in 2008.

The VAT reduction is the equivalent of receiving lots of small amounts. Rather than save the money I just spend it again, injecting money back into the economy, in affect reducing my vat burden has given me more money to spend. This money will be spent across the whole economy saving jobs in all sectors until like capital investment / infrastructure projects which injects cash through a trickle down affect from some sectors into some other sectors.

I guess Nick Clegg has not read the research as he would want to spend the £12.5 bn on capital projects in schools and hospitals. A good idea and there is no reason why you cant also do this as well but it wont put money back into the economy through the pocket of every person in the UK and it does not reduce the pressure on the public at the time when we need all the help we can get.

The Lib Dems even tried to get the VAT reduction overturned. Sorry Mr Clegg although I usually support you I think the VAT reduction was a good innovative policy backed up by scientific research. Ultimatly it puts more money in my pocket and into all sectors of the economy which as I am sure you agree is a good thing.

You can say a lot about Gordon Brown and Alaister Darling but they do seem to know what they are doing with the economy and they are not afraid to try new and innnovative approaches.

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