Quote:
Originally Posted by derekgas
But, just so you know, here is how vat works.. I buy something for the business at £100, the vat I pay is £17.50, even if I didnt put profit on (which at retail is 35%) then to sell the £117.50 on to you is plus vat, so you pay ££117.50 plus vat, equalling £138.06, the retailer pays £38.06 to the vat man and claims back £17.50, so you paid £38.06 to vat and the business claimed back £17.50, the vat man made £20.56 out of you!
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That doesn't add up to me
Surely, you'll be claiming the vat back as well as the retailer?? Which means vat man made just £3.06 from the end product (ie me) with £17.50 being reclaimed by both Yourself and the Retailer.
Under the new rate your example equates to £100 to £115, then the £115 to £132.25. Which means I, as the end user, have saved £5.19 with the vat cut. As I don't feel like I'm paying the tax anyway, because it is part and parcel of everyday purchasing life, then it is a very REAL reduction in what I pay for goods and services.
Therefore any reduction in vat will be felt by all who buy things governed by that particular tax.
Unless, like I said earlier, suppliers and retailers blatantly increase profits by keeping goods and services at the same end user price.