Is the reduction in VAT a waste of time and money?
Despite the fact that the UK government claims the reduction in VAT from 17.5% to 15% has injected a further 1% of gross domestic product back into the system, a report by PricewaterhouseCoopers suggests that the move has been both costly and a complete waste of time. A survey of 2000 people showed that 88% were unmoved by the VAT reduction and it never even crossed their minds when considering their spending patterns. It seems that while the UK government may have hit the headlines after reducing VAT, ultimately the £1 billion a month cost is maybe not money as well spent as they may have led us to believe.
As a time when UK homeowners are struggling to retain their properties you have to question whether trying to increase consumer spending was the right move. The £12 billion a year could have been used to shore up the UK property sector and ultimately assist more people in covering their mortgages or at least deferring them until they are in position to cover their liabilities. So, despite earlier reports suggesting that the VAT reduction had indeed helped the retail sector this may not be the case after all.
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