pongo Posted November 23, 2008 Author Share Posted November 23, 2008 So if VAT gets cut tomorrow as widely predicted - does the IOM Govt's income decline? Yep, it screws us over pretty bad as we're more reliant on vat than the uk government. On the other hand - if people spend more as a result of the tax reduction then maybe the VAT % income will be offset* by the volume of sales. Gordon is probably trying to project similar ifs and buts. Govt income would probably have declined already as a result of reduced spending. No? I've certainly been spending less. (IOM govt has chosen to depend so heavily on VAT revenue over the past decades btw - it is not something which has been forced on the island). *offset to an extent - to some degree Link to comment Share on other sites More sharing options...
cheeky boy Posted November 23, 2008 Share Posted November 23, 2008 50 mil is a big lump of money, I wonder if Mr Bell will dip into reserves to cover the shortfall or cut services, e.g. start sacking people This will be the first time for 18 yrs that the treasury has had to deal with a reduction in income and perhaps this is what's needed to bring them to their senses after the wanton waste of public funds of the last few years Link to comment Share on other sites More sharing options...
Mission Posted November 23, 2008 Share Posted November 23, 2008 I'm not too sure on this one. On the one hand, it might get people spending a bit more (but not a lot really, it's not going to drop the price of the majority of what I sell by much). Yes it'll help in that my purchases will drop too but I don't think it's going to have people out throwing money at me. It WILL however cause me a LOAD of work. It's a big job having to reprice everything and I'm pushed for time as it is what with Christmas coming up and having to sort all the things that come with that out. I can't afford to shut up for a day or two to put things in place so it just means even more spare time given up to reprice everything. It would be nice if they held this off until the next VAT quarter (not long now) so at least we've got a bit of time to prepare and work out how to reprogramme tills and accounting packages etc. It would help with the paperwork too, as you'd just start the new quarter on the reduced rate, rather than have the last few days of this one at a different rate from the rest. Slightly off topic (but still relevant) they keep mentioning the possibility of 'deflation' and people holding off spending because they know the price will get cheaper in the near future. Well, all I've heard from my suppliers is that prices are going up next year, ranging from 4% to as much as 20% in one instance. That's going to seriously impact my business. The worst of it is that the higher percentage increases are on lines that are very price sensitive and margins on those are much lower than the staple range of products I sell. It's a bloody nightmare. Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 Listening to Sunday opinion today, whoever was on reckoned that the isle of man will have a shortfall of £50m did i hear that correct? if its true we are in the shit. The VAT income estimate for 2008/9 in the 'Pink Book' is around £340 million. Knock 2% of that and I make it around a shortfall of £7 million. It has been suggested that VAT will be cut to 15% from 17.5%, a reduction of 2.5% . 2.5% is 14.3% of 17.5%. And 14.3% of £340 million is £48.6 million. In your case Albert, DIY mathematics would not seem to be a good idea. Or perhaps you were just being lazy. S Link to comment Share on other sites More sharing options...
Bobbie Bobster Posted November 23, 2008 Share Posted November 23, 2008 2.5% is 14.3% of 17.5%. And 14.3% of £340 million is £48.6 million. In your case Albert, DIY mathematics would not seem to be a good idea. Or perhaps you were just being lazy. S I was going to make the same point after reading Page 1 but I decided not to be lazy and read through the rest of the thread before posting to see if/when it had been picked up. ...I'll get me coat. Link to comment Share on other sites More sharing options...
manshimajin Posted November 23, 2008 Share Posted November 23, 2008 Overall it's a wonderful solution. Get into a mess through the banks issuing massive amounts of credit without assessing the risks properly. Crunch! Fix the problem by borrowing like crazy and begging people to spend not save. In the meantime....when are the banks, rather than the government, going to start lending again? My betting is on a temporary 'feel good factor' and a UK election before all the euphoria has worn off and before the really massive job-losses bite. March 2009? Link to comment Share on other sites More sharing options...
Mission Posted November 23, 2008 Share Posted November 23, 2008 He seemed quite keen to deny an election, which means he's probably lying. Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 Hmmm. Empty gesture. I don't see how it will help small businesses, net cost of things is not going to change and VAT is just anyway. The VAT element of a sale/purchase is really only relevant to the govt, a company doesnt make a profit from VAT, it just gets all the hassle of the administration of it. It will reduce the amount of VAT on sales but also on purchases too so no-one wins. The Isle Of Mans current government have no idea what is around the corner but, they are prepared for it....nothing that is. Consumer prices will fall by 2.13% as a result of the measure. No big deal. The purchase element for a business is irrelevant since businesses reclaim input VAT anyway. So shop-keepers DO win, in one of two ways: 1 Either they reduce their prices, and this generates more sales (not much, I suspect) 2 They don't reduce their prices, and pocket the difference. Easier, and probably better. S Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 2.5% is 14.3% of 17.5%. And 14.3% of £340 million is £48.6 million. In your case Albert, DIY mathematics would not seem to be a good idea. Or perhaps you were just being lazy. S I was going to make the same point after reading Page 1 but I decided not to be lazy and read through the rest of the thread before posting to see if/when it had been picked up. ...I'll get me coat. Fools rush in, they say.... S Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 He seemed quite keen to deny an election, which means he's probably lying. Probably? Racing certainty. What are the Tories doing? He should have been cut up into small pieces and hung up to dry by now. S Link to comment Share on other sites More sharing options...
Gladys Posted November 23, 2008 Share Posted November 23, 2008 Given the IOM Government's reliance on this income, I can only see it as bad for the OM (not in terms of our individual spending, but in terms of IOM Govt's income). Makes you wonder if they can then sustain the zero rate corporate tax with reduced VAT income. Link to comment Share on other sites More sharing options...
TerryMcCann Posted November 23, 2008 Share Posted November 23, 2008 Apparently the initial government response to this is thay they are going to buy a Euromillions ticket for Friday's draw and see what happens Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 Given the IOM Government's reliance on this income, I can only see it as bad for the OM (not in terms of our individual spending, but in terms of IOM Govt's income). Makes you wonder if they can then sustain the zero rate corporate tax with reduced VAT income. I suspect they'd rather increase income tax before charging corporation tax. And I still wonder what the net effect of the £100k tax cap was. S Link to comment Share on other sites More sharing options...
Gladys Posted November 23, 2008 Share Posted November 23, 2008 How many taxpayers do we have that fall into that category, anyone know? Link to comment Share on other sites More sharing options...
Sebrof Posted November 23, 2008 Share Posted November 23, 2008 How many taxpayers do we have that fall into that category, anyone know? John Wright recently said 49. 500 had been hoped for. S Correction. I THINK he said 49 had moved to the island as a result. If we already had 100 paying twice that, the effect would have been neutral. And with 200 paying twice that, the effect would have been quite a loss. S Link to comment Share on other sites More sharing options...
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