NEWS:VAT to be cut by 2.5%

A talk with MR brown
As we know,the VAT used to be 17.5%.but recently,aimed at kick-starting the economy.government want to cut VAT by 2.5% to 15%.

WHY IS THAT?
In my opinions:because of the recession.People get less money than before.so people won`t buy more products...adding the "economy emergency"has impack whole world.It hits consumers` confident indeed!And "credit crunch"for instance harder to borrow from the bank.so the bank gets less interest rate!!!It lend to bankrupt.......

So what is VAT?
I think it`s a type of tax included the products.Such as food meat....etc...
Government uses that tax to improve produce merit goods.New equipments and health care.
And some of taxes are used to improve public goods!(road,motoway,road sign)

Why government cuts VAT?
The main point is to increase expenditure!If you bought a bottle of milk was 2.35pounds(2pounds for sale,0.35pound for 17.5%VAT)and you buy it now should pay2.3pounds(2pounds sale,0.3pound for 15%VAT)you save 5pence!That just a example to show how the VAT impack real life.That means people pay less on the products even if the price of the product doesn`t change before the tax.

But if cut the VAT,goverment will loss more taxes to improve merit goods!
Why?>..........
Is it really influence the damand and supply?
As we know food and meat are inelastic!That means if price goes down,the quantity of the good won`t change alot!It doesn`t really affect people to consume....It doesn`t make a big difference!

mortgage problem and job problem can be solved out!
Because of the price of the house is decreasing!People can not pay back!If VAT cut down,people have more money in pocket!It will slowdown the problem.......

How about job problem?
To be continued................................