Shops not passing on VAT cut

There seems to be a lot of Fox hunting going on in this thread when, like it or not he seems to be the person speaking the most sense.

The purpose of the VAT cut was to stimulate additional spending and confidence in the economy during a time of recession. However the amounts involved are so small as to mean that this is unlikely. Yes you will save £20 on your £1000 computer but that £20 saving will not be the deciding factor in the purchase. When you walk down the high street during a sale and see anything up to "50% off" regularly you will not be moved to spend based on what amounts to a 2% saving. If you are in the market for high value goods you will have enough disposable income as not to be swayed by the saving and if you are buying low value goods then the savings are so small as to be irrelevant to your spending patterns.

Much of the recovery fom a recession is based on the confidence consumers have in the economy. If you believe things are getting better you spend more and hence things do get better. If you believe things are getting worse you spend less and hence things get worse. Its a self fullfilling prophecy. When the government made this cut and then accidentally let it be known that at the end of the reduced period vat would rise to at least 18.5% it pretty much undid any potential confidence it may have restored.

What you also have to ask yourself is is this the best way they could have used the money this is costing? Would other measures have beenmore effective? For the people who are saying any reduction in prices is good remember that this is not a present or a handout. It all has to be paid back. Are you happy with government debt at £1 trillion, a 2.5% vat cut for 13 months and then a vat and tax increase after that? Suddenly its not so attractive.
 
dirtydog said:
I don't mind whether shops pass on the VAT cut, or save it for themselves - either way it benefits the country which is what I care about. I said this earlier in the thread.
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It will benefit the economy more if the businesses do not pass the savings onto us. This is the part of my point you've lost in your haste to have yet another go (Although feel free, you've done it so often I'm pretty much immune to your sniping now).

Business is the centre of the economy, stable businesses employ people, employed people spend money. if a business choses to ignore the VAT cut and simply increase it's ex VAT price to leave current prices unchanged, it will benefit from additional revenue and zero repricing and readvertising costs. This will put it in a better position financially, give it less chance to go bust losing all the staff jobs, and crucially go some way to offsetting the increased operating costs now suffered by businesses following the 2p increase in fuel duty to offset the VAT cut.

Yes, I'm sure the shop staff can handle giving out extra change. But additional cash handling costs money - like it or not going through considerably more change than usual is going to increase expenses. Average transaction times will increase, cash handling charges will increase at the back office end of things, etc. Especially companies which normally sold things ending only in .99 so usually went through a shedload of 1p's and not a lot a lot else.

I would rather have a stable economy than £2.10 off my next purchase of £100. If that makes me an armchair expert then so be it. Ask me the same question in 5 years time when I've done amazing life changing things like pay a bill from NPower, pay my council tax or have an arguement with my landlord and I will give you exactly the same answer.

PS: Nice try on the armchair expert car thing. How many have YOU driven this year?
 
Dog maybe you should listen to the guy who is currently studying economics. I agree with everything fox says.

For example, a small company having to go about making all these changes will have to spend thousands making the required changes. Thousands which would have saved to pay people wages. For what? So some gimp can save a whole £2.70 on something? And what is the problem with fox not paying a few bills, what difference does it make to anything he is saying?

The amount of money a family will save on this will maybe get them say a fill on petrol over the course of a year. So its hardly worth talking about.

If they cut the VAT to something useful like 10% maybe we would see a difference.
 
think its acceptable for them to keep the 2.5% decrease for themselves. 2.5% increase in a business's margin will be good for them. increase there profits give them a bit more stability. means people employed will not be as worried about job security and therefore won't be hard up on purchasing an extra luxury item now and then. more security = more spending. saving an extra 2p isnt going to be much to us but to small business's it could be a great help.

what wont be is in 13 months time when vat goes up to 18.5/20%
 
teaboy5 said:
Dog maybe you should listen to the guy who is currently studying economics. I agree with everything fox says.
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Listen to the person who is studying real life compared to the person who is living it?

I have studied economics too. Fox, from his bedroom in his parents' house, is not the fount of all wisdom, oddly enough.
 
But then I've never claimed to be the fount of all wisdom - I've simply posted my opinion. Which, rather than debate the facts, economics and politics of the situation you've instead decided to try and discredit my opinion rather than debate it with me.

Why is that?

dirtydog said:
I've driven real life this year, in fact I was driving it while you were still at school.
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Brilliant, where has it got you out of interest?
 
Yet again, you'll ignore the difficult questions and instead go straight for the ones where you can make a quick quip. How very predictable.

I chose to spend my time after I finished school studying, you chose to spend it getting a job right away and moving out. Great, have a cookie and a badge. We have different aims and objectives. What is so wrong with that? Why don't we have this discussion again in 20 years time and see how things have changed?

I'd hope that after so many years independance and full time work you are in a pretty good position right now, earning what, £40k+?
 
[TW]Fox;13004003 said:
Yet again, you'll ignore the difficult questions and instead go straight for the ones where you can make a quick quip. How very predictable.

I chose to spend my time after I finished school studying, you chose to spend it getting a job right away and moving out. Great, have a cookie and a badge. Why don't we have this discussion again in 20 years time and see how things have changed?
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It would be irrelevant to the thread topic, which is judging how the VAT cut affects the average person, and the economy as a whole.
 
Exactly, not judging me for my life choices.

So, lets get back to the economy, right? I notice you've as yet failed to address any of the reasoning I've given for my opinion and why I think businesses should retain the VAT cut for themselves and use it increase price.

Why do you think the VAT cut should be passed on by shops?
 
[TW]Fox;13004020 said:
Exactly, not judging me for my life choices.

So, lets get back to the economy, right? I notice you've as yet failed to address any of the reasoning I've given for my opinion and why I think businesses should retain the VAT cut for themselves and use it increase price.
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If you keep weighing in on how a tax cut affects the average person, don't be surprised if people point out that you have sod all experience to assess that.
 
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