Has Government considered the business cost of its actions?

With all the concerns over the economy and keeping people in work was now the right time fro the Government to cost business an estimated £300 million to be able to reduce the rate of Value Added Tax by 2.5% on 1^st December 2008? Having had some time to reflect on the Pre Budget Report Statement many retailers are thinking that the VAT reduction will not necessarily get passed onto shoppers at the till without negotiation and so is it all really worth the aggravation being caused?

 

This Government has been good at wasting resources. In its first term of office its obvious inexperience of being in Government led them to creating many costly talking shops whilst trying to reach the right answer on policy decisions. Laudable maybe in trying to discover the right answers but if Gordon Brown’s zig zagging method of being Chancellor has been mirrored across the board then a lot of right answers were not reached making the spend uneconomic.

 

Gordon’s last error; the 10p tax rate withdrawal (as if you didn’t know) has proved particularly costly to the Nation. By compensating all tax payers in the way they did the Chancellor issued another tax coding notice to every tax payer to every employed person with the new personal allowance on it. This cost the price of a stamp, an envelope, labour or machine costs to pack it and at least one sheet of A4 paper to produce it within HMRC.

 

Upon receipt there were the extra professional costs to check them to ensure accuracy. But how could they be wrong you ask as only 1 item changed; the personal allowance from one sum to another. Ah yes, but you have to consider that other tax codes had already been issued in many situations which had had things changed that were not correct. We had checked these and advised of the revisions. In many cases these had either not been processed or returned to the incorrect figures again meaning further amendments. Some clients we have had 7 or more tax coding notices this year!

 

And if this was not staggering enough we had to use our working together links to access a computer programmer to understand how the program worked so that we could telephone a Manchester tax office to explain how to use the software. I think this is called training and probably unaccredited training at that as we had never seen the software and so offered it in virtual way. “When a blind man cries” I think was the name of the Deep Purple song!

 

Trading in a difficult economy requires care and attention over the overheads to keep spending at a minimum. I think we need to see some appropriate care and attention from our Government to ensure that they do not cost their customers too much money and at the same time keep their own overheads to a minimum whilst offering an efficient and well trained service.

 

Now there’s a challenge for the New Year resolution!

It’s not going away: the 10p debacle that is!

The debate over the 10p rate debacle rumbles on following the publishing of a Cross-Party Treasury Committee report on the subject. The report suggests that 1.1 million households still remain £112 worse off under the emergency measures that Alistair Darling announced in May and that this announcement must not be a “one off” measure to appease those affected by Gordon Brown’s infamous final announcement as Chancellor in his final budget.

 

There was small praise for Mr Darling in that the measure he introduced was “the least bad option” but comment that it had been “poorly targeted” and concern over how this will be funded into the future as the Institute of Fiscal Studies have warned that Gordon Brown’s sustainable investment rule could be broken by this measure in future years.

 

Poor Mr Darling. He must feel like John Major did having won the 1992 election. Having taken on the Chancellorship he inherited the final publicity stunt Mr Brown thrust upon us in his last budget. So how does he get out of this mess?

 

Two options exist. Firstly resign and make a powerful Geoffrey Howe like statement to the House referring to my “learned plank from who I took over the job”, or secondly do the honourable thing and do a complete U-Turn and reintroduce the 10p rate band and increase the basic rate of tax back to 22%. The first option might help shift Gordon from Number 10 back to Dunfermline but might signal the end of his political career, the second might get him the sack in a pre budget reshuffle in a desperate attempt by the Cabinet trying to avoid seats in the Shadow Cabinet.

 

But if the second option is not done how do the Government ever hope to fulfil the needs of those requiring reimbursement and satisfy the cross-party treasury committee’s recommendations, whilst maintaining financial stability and satisfying prudence?

 

Climbing down is always seen as weakness and offers the opportunity of attack from opposition parties. But in this case would it not shut them up? Granted they will claim that “you don’t know what you’re doing” but having had 10 years of prudence with Mr Brown at the helm surely we don’t forget her altogether and embark on a financial suicide course that satisfies what purpose?

 

It has been a tough year for Mr Brown. Politically probably the worst of his working life. This report following 5^th place in the Henley by election must certainly reignite the “time to go” notes being passed in the House before Summer recess.

 

It doesn’t look good for Frank Field either. Having not noticed for over 12 months how the withdrawal of the 10p rate band was going to affect the tax paying public, he then makes a big fuss. He then backs down when the changes are announced only to then realise he might have been sold another pup, and now says; “We will be looking, when we debate this in the Commons, and when the government promises it will come back in November, for a proper settlement for everyone who lost out on 10p.”  

 

Come on Frank, if you asked the right questions before backing down you could have settled this by now and given us the General Election most people seem to want. But maybe you, like most Members of Parliament, are not as principled as you say you are!