The great VAT swindle

Recently the UK government announced the reduction of UK sales tax (VAT) from 17.5% down to 15% in a bid to help the economy.
99% of UK enterprises are small businesses, we are a nation of shop keepers after all.

Many people have questioned how such a small change will revive the economy. I think it will; because increased profit for small businesses.

This being done at the busiest time for sales within the retail sector. Many shops break even all year and make most of their profit at Christmas time.

I have a small business and I am liable to collect VAT on behalf of the government from my customers. When I became VAT registered and started charging VAT I did not put my prices up by 17.5% because I would have been priced out of my market.
As I didn't put my prices up, I won't be putting them down when the rate changes on Monday 1st December.

One of the things on my to do list for a long time is to update my postage rates since Royal Mail have increased prices a couple of times since I set mine. Well as I have to change the tax, this is an ideal time for me to increase the prices to be in line with Royal Mail.

This had me thinking, if I was selling an item for 95p I could quite easily increase the price up to 97p, with all the changing prices and peoples expectations of lower prices would anyone notice?

Many business costs have increased this past year, but this has been difficult to pass onto customers, perhaps this is the opportunity and what the government really had in mind?

I own a small restaurant and I will not be lowering prices.

Increased energy costs and food costs would have meant price increases which I have so far managed to soak up but now I can keep them the same.

Maybe this was their plan - for the small business to become more profotable overnight and leave all the price changes to larger retailers.

Most of my business collegues are dooing the same.

Guess most would notice. My sister has her own giftshop combined with a coffee shop serving special kinds of coffee, tea's and pastry: And when our currency turned to the euro for instance; A lot of the suppliers demanded more money claiming as excuse the rising costs for import and transport. Then when the final pricing was set for products on sale, existing customers found them quite high. Although it was a price change between 0,85 cents to as much as 2.35 euro.

When you try to explain these things to the customer they take it with a frown, but have no other option than to accept or try another store. It isn't even a try to get more money out of them, but for a small shop there are not any other alternatives.

Anyway, this has not much to do with TAX. Or VAT for UK. Therefore I present another example. Our government lowered taxation for barbershops, this did not reflect in barbers lowering their prices. Those stayed equal and in some cases even went up. People noticed, but what can they do about it?

[edit on 29-11-2008 by Stranded]