Saturday, September 19, 2009
Apparently so far the government has no inclination to extend the tax break for the UK car market. I think tax break is a better description than "car scrappage scheme" because the government subsidy was equivalent to VAT, so the scheme operated as a tax free period. This makes me wonder during recessions and consumer entrenchment, whether taxation levels designed to maximise revenue during more normal trading conditions, actually reduce revenue and economic activity during downswings as become -relatively- more oppressive. Which leads on to, given the government cannot reduce the real interest rate, are there any options left at all to encourage consumption and stem unemployment?