79% of people are not stupid

The reason for the pathetic little trimming of VAT, other than to increase the profits of major Labour donor Lord Sainsbury, is to try and get people spending money to keep the economy ticking over. This will only work if Ricardian equivalence does not hold. They may be right, it may be that we are all so highly taxed already that any tax cut simply makes survival a little easier rather than freeing up money that can be saved. However they may be wrong because most people at least realise that all of this debt that Labour is running up will have to be paid back later with interest according to the polls.

65% of people said they had cut their expenditure because they were worried about the future and that a majority of people - 54% - disagreed that they would spend more if the government cut their taxes. An overwhelming majority (79%) thought that any tax cuts now would mean higher taxes in the future.

When people realise that they are not going to see any of this VAT cut anyway, but they are going to see their take home pay fall when the national Insurance rises kick in the prospect of people saving now to have something there for the tax rises to come.