More on the VAT debate.

Further to my most this morning on the VAT question,there seems plenty of discourse in the blogosphere as to why it is a bad idea.

John Redwood says that

Just about the worst tax cut they could design is a VAT cut. It’s costly on the revenue, but will have little impact on the problem. People do not feel well off. Offering them 2.5% off dearer items at a time when the shop and showroom prices are already 10-20% down is not going to do much.
It’s not fair on the poor. Essentials that make up most of the budgets of the lower paid are already VAT free. The biggest gains will be for those who buy expensive wines, flashy cars and use lots of petrol. If markets do not like the borrowing figures we will lose more from the higher long term rates of interest the markets will demand of the government.

He prefers an income tax cut as a way of redistributing tax revenues on a fairer basis.

Over at Coffee House James Forsyth is

unconvinced that a cut in the VAT rate will be that big a political winner for Labour. First VAT is a hidden tax, a lot of the time people don’t realise they are paying it as it is incorporated in the price. Second, sterling’s weakness means that imports are going to become more expensive regardless of this cut.