I just came across an article today stating that U.K. Value-Added-Tax will be raised to 20%.
From Bloomberg Businessweek, June 22 (Bloomberg) — British Chancellor of the Exchequer George Osborne increased the value-added tax rate to 20 percent from 17.5 percent in the first permanent change to the levy on sales of goods and services in almost two decades.
The ‘they’ of course refers to government. Not just the British government, but most all governments. Seeing this happen in the U.K. is only a precursor to what will happen here in the U.S. as our own budget deficits are soaring beyond control and serviceability. An ever increasing amount of Treasury bills need to be sold each month just to keep up with the debt and interest on the debt.
I’ve also been hearing lately that it is becoming or has become mathematically impossible to maintain this debt service and that we here in the U.S are headed for bankruptcy, albeit probably after many other countries go first. Due to an initial ‘flight to safety’ reaction, the US Dollar may survive a bit longer until the perception wears off and the realization sets in that the dollar is only the best of the worst.
Why is it that so many governments have no backbone to ‘bite-the-bullet’ and pull back spending rather than to raise taxes – which will only slow down any further hopes of recovery. When times were good, and the money was rolling in to government coffers, they would spend it just as quickly while establishing new ‘programs’ – which in turn, requires an endless inflow of monies to maintain themselves.
Well, times aren’t always booming. Any common sensible person knows that all good things don’t last forever. Part of the problem is that not everyone has common sense. Look at all of the people that bought big and expensive McMansion’s during the good times while leveraging every last dollar (pound, euro, fill-in-the-blank…) of their paycheck to live the big life.
Governments are no different, and I suppose we all get what we deserve.
Hold on to your wallets because here comes the tax man…
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