Tax Shock Britain!

VAT (Value Added Tax) is rising from 17.5% to 20% from 4th January 2011 in the UK. VAT is the tax you pay on goods and services; the rise brings the UK more into line with the rest of Europe (Germans for example pay 19%, the French 19.6%); though 'essential' things like food, children's clothing and newspapers remain VAT free.

So things are going to be more expensive to buy; businesses will find it harder to sell things; and we'll have less money in our pockets with increasing taxes in general for which to purchase things in the first place. Seems quite gloomy, doesn't it?

Maybe we should look to Hong Kong for inspiration to get us out of this mess? That's what was proposed in the recent Channel Four documentary Britain's Trillion Pound Horror Story by film-maker Martin Durkin. He estimated that the UK owes £4.8trillion pounds - £4,800,000,000!!! The film argued, controversially, that our tax policy is inherently flawed and that in fact if we taxed ourselves less we'd not only be better off, but stronger economically. I found it a convincing argument and am now keen to read that wise Scotsman, Adam Smith and his groundbreaking publication from 1776 - "The Wealth of Nations".

I guess that such a seismic shift in our current economic policy isn't going to happen though - don't think our politicians have the kahoonies to do so!