VAT the hell?

As of the end of October this year Irish VAT receipts were down for the fifth consecutive month making them €383 million or 4.8% below target on a cumulative basis. Which is why I am still amazed that our esteemed Minister for Finance, Michael Noonan, has not come out and corrected the obvious reporting error that he will be increasing the top rate of VAT by 2% as a means of generating an extra €670 million in revenue.
I say it has to be a reporting error, as for it to be true Michael Noonan would have to believe that making retail prices more expensive during a time of economic stress will lead consumers to spend more. Retail spending to the year ending in September 2011 was down by 3.9% and only a drug addled lunatic could possibly think that a rise in prices will reverse this.
Clearly he meant that he would be reducing VAT (top rate or otherwise) by 2% leading to a drop in retail prices, an increase in domestic demand, an increase in employment in the retail sector thus an increase in income tax receipts to offset the decreased VAT income. Indeed the VAT receipts would probably hold steady as sales would increase and the newly employed workers in the retail sector would themselves be out spending their newly earned wages.
So come on Michael please say it ain't so and you really meant decrease all along. If not, well it's just too depressing to contemplate..

Ridiculous Numbers

There is much call these days for the ECB to start 'printing' euros to increase the size of the European Financial Stability Facility. This is the special purpose vehicle established and financed by eurozone members to combat the European debt crisis. Basically it is where countires in the eurozone can go to borrow money if they cannot raise it through bond issues as the markets demand to high an interest repayment.
Italy is now about €1.9 trillion in debt and France €1.6. If you add in just a few smaller countries, Greece,Belgium and two or three others you can, very quickly, get to around €4 trillion.
As investors have begun to realise that there is a very real chance their money will not be repaid they have sought to offload these eurozone IOUs (bonds) thereby making it more and more difficult for these countries to raise money as the market wants higher and higher interest on them to make the risk worthwhile. So we are back to the EFSF.
So if the Germans capitulate and increase the size of the fund to, say, €2 trillion (as many have demanded)  they really need to get the printing presses rolling soon. I say this as I did a little thought exercise and if the ECB were to start actually printing physical euro notes at a rate of, say,  €1 million a day, seven days a week, it will take them approximately 5,480 years to get the job finished.
Thankfully it is easier to just hit the zero twelve times on a computer .