He giveth and taketh
Chancellor George Osborne has delivered a Budget speech with a wide range of spending cuts and tax rises. Hoping to balance the books by 2016, Osbourne announced that value-added tax (VAT) would increase from 17.5 per cent to 20 per cent from January 4, 2011, generating an estimated £13bn for the Treasury's coffers.VAT is relatively easy to charge and hard to avoid, making it an obvious candidate for a tax rise, but the implications are all too apparent for the technology industry, where many aspirational products have a high price elasticity of demand.
Assuming that the VAT rises are passed directly on to the consumer, which is likely, a £300 product (£255.32 plus VAT) will cost £306.38, and £1,000 PC (£851.06 plus VAT) will come in at £1021.28.
On a positive note, council tax has been frozen for two years, personal income tax allowance will rise to £7,475 in April 2011, and public-sector workers earning less than £21,000 per year will receive a flat pay-rise of £250 per year for two years.
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