Thursday, June 07, 2007

Green Party VAT Policy seems misguided

It’s beginning to look as if the Fianna Fail talks with the Greens may fail to arrive at a successful conclusion. This will bring the game back to the original FF/PD + Independents model.

There are several points of policy compromise which could prove insurmountable, particularly with the Greens having to get approval for any deal at a convention of their members next Sunday - and the need a 66% vote to approve the deal.

Quite separately, and not something I expect is a problem in the negotiations, one aspect of Green manifesto has puzzled me - the proposed reduction in VAT rates by 1% - supposedly to help the “less well off”.

Most family supermarket trolley items are already Zero VAT rated, as are medicines, children’s clothing & footwear and books.

A blanket reduction in VAT rates will give most benefit to those who have the greatest discretionary spending capacity, the “less well off” will have very limited spending capacity beyond the staple items.

So such a VAT reduction will certainly put a little more small change in the pockets of the needy.

On the other hand, the big spending Killiney & Dalkey residents ordering their weekly wine deliveries from Mitchells, dining in Cavistons, putting €80 worth of petrol in the Merc, booking the Riviera holidays etc., will be material beneficiaries.

Have I got it wrong?

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