Tag Archives: VAT

Va Va Gloom for Motor Industry

New car sales have dropped nearly 37% since last November, with Edinburgh car dealerships one of the the many affected.

According to the Society of Motor Manufacturers and Traders (SMMT), 100,333 new cars were registered in November, whilst private car sales was down 45% in November, which haven’t been as low since the early 1980’s.

This news follows the decision by Honda close its UK factory in Swindon for the duration of February and March next year, whilst BMW is closing its Oxford factory, which produces the Mini following a poor year.

As America’s car manufacturers Ford, Chrysler and General Motors continued to lobby for a $34 billion (£22.9 billion) bail-out many commentators are suggesting the car industry may be the next to fall foul of the credit crunch as financial tension caused by dropping sales and increasing production costs.

SMMT chief executive Paul Everitt said: “While some consumers may have delayed their purchases to take advantage of the recent VAT reductions, overall demand continues to fall.

He added: “Urgent action is required to ease access to credit and finance, both to support consumers and meet the cash-flow needs of the industry.”

VAT Tax Cuts To Be Announced This Afternoon

By Jamie Nelson

Brown and Darling arriving at The Treasury this morning to put final adjustments to the PBR.
Brown and Darling arriving at The Treasury this morning to put final adjustments to the PBR.

Alistair Darling is expected to announce cuts to Value Added Tax from 17.5 percent to 15 percent in his Pre-Budget Report this afternoon.

Gordon Brown promised to use the tax cuts to inject a new vigour and interest into the British Economy.

Brown said: “Simply letting the recession run its course, to say there is no alternative, is not an option.”

The 2.5 percent cut in VAT is to be funded by another of the PBR main aspects – a 45 percent income tax increase to those earning £150,000 a year or more.

Conservative leader David Cameron was critical of the plans for change, calling it a “borrowing binge”.

He said: “ This lot are promising you everything, promising the Earth and they are going to clobber you with an enormous tax bill.”

The plans outlined in the Pre-Budget Report will put borrowing above £100 billion, leading the Conservative party to accuse Labour of creating and storing a “tax bombshell”

Brown rejected the claims and defended the Labour Party and Mr Darling’s stance, saying: “We have seen in previous recessions how a failure to take action at the start of the downturn has increased both the length and depth of the recession.

“Doing too little too late would mean more damage, more deterioration, the loss of vital businesses, a weaker economy, lower growth, eventually greater fiscal problems and in that event, higher interest rates and higher taxes.

“The best way for taxes to be low in the long term is for us to ensure that the downturn is as limited in length and scope as possible.

“And that means help when help is needed. Not when it is too late.”