So, Gordon Brown plans to cut VAT (sales tax) from 17.5% to 15%, to "stimulate the economy". So, every £1000 you spend in shops, you ought to save £25. However, the cost of implementing this (to the government and businesses) will be almost as much as the cut. Also, the cost of resetting the rate back to 17.5% in a few years is going to be high too. So, that's eliminated the cut's usefulness.

How will the government pay for the cut? By raising taxes far more, that's how! They will go back on their pledge to keep income taxes level and will make the top tax rate 45%. That should pay for it...

...so they're going to raise taxes more, for no reason.

- National Insurance will go up by an amount that works out to 0.5% of everyone's total income. Everyone. From people with no income to the rich to pensioners. That's £1000 out of a £20000 income.

- Oh, and duty on petrol, alcohol and tobacco will go up significantly too. That will negate the VAT rise to consumers too, since we can't avoid paying for petrol (and it's already more than double the price elsewhere) and alcohol consumption is likely to increase due to the recession.

- Thought that would pay for it yet? No - the government is also going to borrow more money than any UK government ever has, even during WWII. This will be paid for by even more 'future tax rises'.

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Thanks, Gordon. The plan you've set out will take more money from every demographic and also businesses. Just what we need during an economic crisis. Your bad leadership created the situation, and now you aren't even managing it right. All the public will see is the *shiny* VAT cut, and you'll even get more votes for it for appearing to be in control of the situation. I just hope I'm 18 by the time you call a general election.

the vat cuts good for me because I'm poor. But it's a problem for my dad cos he fits into the 45% wage bracket so he is going to be paying a rediculous amount.

But good for me so I'm ok lol

Assuming VAT applies to less than 20% of the money you spend (all that qualifies is 'non-essential' retail purchases), the National Insurance rise of 0.5% of your income completely cancels it out, doesn't it?

I don't pay national insurance. I don't have a job and i wont until next summer. In the summer this will become a problem for me, but now it is slightly benefitting me.

OK. You're not in the majority though. (I'm with my parents and it affects them).

The idea of the VAT cut is that it makes you spend money. A tax cut else way, say on income tax, puts more money in people's pockets, but they might not spend it. With a VAT cut, you have to spend money to actually benefit.

It's all too get people spending, which is the stimulus of our economy. The sterling is generally too strong for us to be successfull as an export economy, so most of the jobs are based on our own people spending, rather than other nations buying our stuff.

This means that when people stop spending, and start saving, which they are, firms start lowering production, and cutting jobs, making people more worried and spending even less, in case they lose their jobs. It's a vicious cycle, this VAT is the best that they could come up with, its not ideal, but there really is nothing else that can be done.

With all that said, this would be the perfect time to join the Euro. The Euro is stronger than the pound, meaning prices of imported goods will drop. The government's reason for not joining the Euro last time was that our trade cycles were out of sink, and the rest of Europe was in a recession whilst we weren't... this is no longer the case, and everyone's in a recession, what reason do they have now?

Oh, and my dad's business will be about a £100 better a day from this VAT cut, I wouldn't call that harming.

1. Agreed. I do know what the purpose of it is. It just isn't enough to make a difference and is more than offset by the tax rises and implementation costs.

2. So the recent fall in the pound should be good to reduce our trade defecit. But we get inflation.

3. Mandatory price ceilings on power, water, gas and petrol? It's no more interventionist than the bailout.

4. Yes. Completely. I mean, I like the Queen, but...

Wait, so you're not lowering your prices to pass on the benefit to consumers? If that's typical, then the VAT cut will have no effect!

Tax the rich I say.

Everyone that earns more than me should be taxed 95%!!