Back in March 2009 The British Retail Consortium warned Alistair Darling he has chosen the worst possible time of year to impose the huge task of reversing last year’s VAT cut. They said that December is the busiest period for most retailers. It cost the sector around £90 million to implement the cut to 15 per cent and, because of the timing, will cost a similar amount to reintroduce the 17.5 per cent rate.
However, the Conservative Party is looking at the possibility of putting VAT up to 20 per cent if it gets in power, which may have serious repercussions for retailers, many of whom are increasingly being forced to compete on price. Shop’s opinion is that politicians of all parties should just stop meddling and leave retailers alone. The BRC reckon the original VAT cut was just a ruse to disguise the fact it’s going to be hiked up to pay off our national debt.
The British Retail Consortium was hoping to minimise the disruption and confusion by calling on the Government to postpone returning VAT to 17.5 per cent by at least one month to the end of January 2010 but this never happened and the VAT rate changed from the 1st January 2010.
Many larger organisations will probably swallow the 2.5% increase to keep consumers spending after Christmas but I would think this will only be sustained until the end of January putting shop owner further in debt. Re-pricing a complete shop to show higher prices must be a depressing thought for shop owners especially when they want to attract consumers not drive them away to search online for better prices.
Posted under Business News
This post is a Blogger on January 2, 2010
