Just to say that Ed Balls’ proposed VAT cut is the most idiotically stupid proposal I’ve heard from a politician since he made his boss cut VAT to 15%.
Not because VAT is a good tax – it’s regressive and illiberal, dictating how people should spend their money (food, books, children’s clothing) to save tax – but because footling around with 2.5% here or there creates a massive admin headache for small businesses and makes little difference to the price on anything but the big ticket items which are usually bought on credit. Yet it creates a £13bn hole in the government’s finances.
Balls could be right that we need some fiscal loosening, but – if so – it would be much more effective to spend £13bn on infrastructure projects than on this bonkers vat cut.
If you’re going to reform VAT, abolish it.