Why reducing VAT is a bad idea

When Gordon Brown revealed that he planned to reduce the rate of UK VAT from 17.5% to 15% he thought he was a genius. In fact everyone he showed it to probably told him he was a genius. Wrong Gordon.
To the average man in the street the reduction is going to mean very little indeed. Does he really think that people are going to rush out and buy that new DVD player because it now costs £29.25 instead of £30? I don't think so!
In fact many of the reductions won't be passed on at all, instead shops will swallow the extra 1.5% in profit, which will hardly cover the cost of having to reprint all their catalogues to show the new prices.
This is just another example of Gordon Brown trying to grab headlines, when in reality he is delivering very little. If he wanted to make a real difference he should have suspended VAT entirely for the month of December.
But with the UK government so hard up that its having to sell off its nuclear weapons, its no suprise that all Gordy can do is grab headlines.

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