Is a 2.5% fall in VAT really going to help you?

In January 2008 the Office for National Statistics published what they believe the average household expenditure figures were. The figure they came up with was £456 per week.

Now we know that since 2006 when the data was collected inflation has risen and nearly everything is more expensive, especially fuel and food. So let’s be really generous as say everything has risen by more than 50% over two years and say the average household spends a nice round £750 per week.

If all of that expense had VAT included and lots doesn’t like bus, rail and tube fairs then we would save 2.5% of that £750 which is £18.75 per week.

Now assuming retailers, utility companies and all the other places we part with money with pass this on quickly then the BIG QUESTION is:

1. Will it really make a difference to your spending
2. Should you be encouraged to go out and spend more on Christmas
3. Does it help the people who need it most

The families really struggling are not consuming and therefore a reduction in Tax that related directly to spending doesn’t help a great deal. Surely we should be spending money helping people whose homes are being repossessed or have lost their jobs. People who are currently contending with Bailiffs on their doors or creditors chasing missed repayments at every turn.

What do you think?