Letter: Wrong rates

Michelle Smythe (Letters, 22 December) and other borrowers may well benefit from today's low mortgage rates but she should spare a thought for the far larger number of savers, many of whom depend on their interest to augment a low pension.

Excessively low interest rates got us into this mess in the first place, and may well be helping to generate the inflation she currently fears.

She derides the impending VAT increase. But with most necessary family expenditure either VAT-free or at 5 per cent, a family will have to spend 8,000 per annum on all other "discretionary" items for the extra 2.5 per cent VAT to be even 200 per annum.

I am certainly no apologist for the bankers and politicians who caused the mess, but 20 per cent VAT and 20 per cent basic income tax, are perfectly sensible - if augmented by a tax-free personal allowance equal to the minimum wage, with the basic pension increased to a similar sum, and higher tax rates of say 35 per cent and 50 per cent above realistic thresholds, all of which the Labour government should have enacted in the "boom" times and at least some of which the coalition is implementing.

John Birkett

Horseleys Park

St Andrews