Belfast Telegraph

UK Website Of The Year

Shoppers ‘haven’t noticed 2.5% cut in VAT’

Published 27/08/2009

The Government's 2.5% cut in VAT has had almost no effect on shoppers, accountancy firm PricewaterhouseCoopers claimed yesterday.

A survey of 2,000 consumers commissioned by the firm found that 88% said that the cut had had no impact on their spending.

Only 8% of respondents said they had spent more, with 5% spending a little more and 3% spending a lot more. The remaining 5% of those asked were not aware of any VAT change. The cut, due to be reversed in January, was designed to prevent a meltdown on the high street during the worst of the recession. But some have questioned whether it is worth the £9bn estimated cost.

Stephen Coleclough, tax partner, said: “These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers' spending has been unaffected by the VAT cut. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their New Year sales in anticipation of a VAT increase in January.”

The British Retail Consortium said the cut had had a limited but positive effect on sales. However, David Page, an economist at Investec, said that it should be considered against sterling's weakness.

“That has raised retailers costs,” he said. “The cut means they have not had to pass all of that on which could have badly hit sales. The retail sector has been remarkably resilient in recent months, even if consumers have not noticed the cut.”

Belfast Telegraph

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting?

Read More

From Belfast Telegraph