Thursday, 27 November 2008

Brown and Darling are Idiots

From The Times this morning, evidence of what I said earlier in the week, the VAT cut will cost just as much to the economy as any possible boost in sales.

"There were growing signs last night that technical difficulties of putting in place the VAT cut has thrown retailers into disarray. Deloitte, the accounting firm, said that its VAT helpline was receiving 30 calls an hour. Asda said that changing prices on the shelves of its 356 stores would take 100 man-years and that adjusting to the new rate will cost £10 million.

The Treasury has admitted that the total cost to the UK economy of the 13-month cut in VAT to 15 per cent — and restoration to 17.5 per cent in January 2010 — will be £300 million. Costs, outlined in Mr Darling's Pre-Budget Report, include “familiarisation with the changes, re-pricing, book-keeping and accounting checks and system changes”. About £175 million of costs will be run up in the current tax year and a further £125million of costs in 2009-10."