The Times newspaper suggests a simple meaure to help the current economic crisis: reduce VAT from 17.5% to 12.5% for the next two years - instantly cutting almost all prices in shops by around 5%. The argument for doing this is quite simple:
1. The economy is shrinking. Only tax cuts will give people more money in their pockets to go out and spend more, which will in turn help the economy and create jobs.
2. Cutting VAT in particular would boost business because it would lower prices for consumers.
3. VAT hits poorer people hardest, and so does the credit crunch. Lowering VAT would give the most help to those on low incomes.
There's a lot to be said for this idea in principle.
Unfortunately, the idea is a complete non-starter for any party except UKIP. Under European Union law, our government doesn't have the power to cut our own VAT rate because we have to pay some of the money we collect in VAT directly to the EU. Remember, without leaving the EU we are powerless to control our economy. At a time like this, we need every option at our disposal.
Click here to read the Times article online.
Josh O'Nyons is a former UKIP member.
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