The trouble with tax cuts

Sara Yirrell: The 2.5 per cent cut in VAT is just a drop in the ocean

I have enjoyed reading the national press reaction about Gordon Brown’s, sorry, I mean Alistair Darling’s pre-budget report.

One headline that really caught my eye over someone’s shoulder was ‘I owe, I owe, it’s off to work YOU go’. The article hinted that the entire UK workforce is going to have to pay in some form or another for the levels of unbelievable debt this government has got us into.

I'm not making a political comment here as I have one standard opinion about all politicians that I will not print in a family newspaper.

The 2.5 per cent cut in VAT is really a drop in the ocean and will probably cost most firms considerably more to implement than they will get in return in terms of printing receipts, changing financial systems and correcting pricing.

Also how much of a real difference is this going to make to prices? Not a lot.
However, the £1bn rescue package announced for small businesses is quite an interesting concept, although banks can offer a further £3bn if required.

The UK has about 4.3 million SMEs, according to the latest figures from the Federation of Small Businesses. Everyone is facing the prospect of a tough economic climate, and every one of them is entitled to ask for help.

So divide that initial £1bn between all of those SMEs and you are not really left with a lot to go around – ­ I make that about £230 a piece. Just try not to spend it all at once.

Sara Yirrell is editor of CRN ­ sara.yirrell@incisivemedia.com