swordfish1 Posted January 4, 2011 Share Posted January 4, 2011 To be honest the rise in VAT from 17.5% to 20% only increases prices by 2.13%. A product costing £100 ex vat, would have been £117.50 before the VAT increase and is now £120. Would you be swayed into purchasing something by a 2.13% discount? No, then why be swayed away from purchasing it by a 2.13% increase? My spending habits won't change because of the VAT rise. When the car I was thinking of getting was around 30 grand, a VAT increase of 2.5% is a hell of a lot. I agree day to day spending won't alter a jot for most people. Big purchases may though Link to comment Share on other sites More sharing options...
llamatron Posted January 4, 2011 Share Posted January 4, 2011 nope I nearly bought a few things before the vat increase, then worked out how much more they would be and thought its not worth bothering to go to the shops until the sales have stopped. Link to comment Share on other sites More sharing options...
lizmachin Posted January 4, 2011 Share Posted January 4, 2011 Isn't it odd that the split on who thinks VAT increase will make a difference is split along party political lines? Does this mean that forumers ask the party leaders forpurchasing advice? From a personal point of view I suspect it won't alter what I buy when in the UK. If I need it I buy it. But I just remember the old car scrappage scheme where manufacturers were required to contribute £1000 towards the purchase of a new vehicle. Many responded by increasing prices by way more than £1K on the run up to the scheme, and lots of folks actually bought their first ever new car for more than it would have cost them 6 months before. After the scheme finished and sales dropped off the prices came down again. It's called supply and demand. I suspect that a lot of folk will have rushed out to buy goods before the VAT increase only to find they could have bought it cheaper after the tax has increased. Link to comment Share on other sites More sharing options...
convert Posted January 4, 2011 Share Posted January 4, 2011 When the car I was thinking of getting was around 30 grand, a VAT increase of 2.5% is a hell of a lot. I agree day to day spending won't alter a jot for most people. Big purchases may though Depends if you consider £638 a hell of a lot of money though. If one can afford to spend £30K on a car then £638 shouldn't be too painful. Link to comment Share on other sites More sharing options...
DaFoot Posted January 4, 2011 Share Posted January 4, 2011 I suspect a lot of prices will be going up a little more than the VAT change would warrant as businesses round up prices. Link to comment Share on other sites More sharing options...
alchresearch Posted January 4, 2011 Share Posted January 4, 2011 I was thinking about buying a 1.6l car however now will buy a 1.4l, as I cannot afford to keep filling a tank of that size. How about considering a diesel? Although fuel is a few pence per litre more you'll get almost double the mileage compared to a petrol. As for the VAT rise, don't forget to check that dodgy retailers aren't adding 2.5% to the current price. The current price already includes 17.5% VAT. Link to comment Share on other sites More sharing options...
taxman Posted January 4, 2011 Author Share Posted January 4, 2011 Most shop wouldnt put the price up as it cost more to do all the paperwork and update the system I bet most shops will put the prices up, I suspect some will even add a little on top of the VAT rise. It's also worth remembering that although some goods will not be subject to the VAT rise the costs of transporting them to the shops will rise, thus retailers could legitimately increase the price of such items to cover their costs. Link to comment Share on other sites More sharing options...
LordChaverly Posted January 4, 2011 Share Posted January 4, 2011 We could of course attempt to apply marginal cost theory to gauge the possible impact of the VAT rise, but as this theory (like most others in neo-classical Economics) is too crude to cope with the complexities of the real world, it is completely useless as a predictor of economic decision making. I prefer to go with my gut feeling that a rise of 2.5% will have very little impact on buying decisions (and therefore it will have the effect intended, i.e. a significant increase in tax revenue). Link to comment Share on other sites More sharing options...
swordfish1 Posted January 4, 2011 Share Posted January 4, 2011 Depends if you consider £638 a hell of a lot of money though. If one can afford to spend £30K on a car then £638 shouldn't be too painful. One can afford 30 grand on a car. I just don't like the fact that it'll cost me £638 more than yesterday. I already haggle down as much as I can so the increase has just put me off. Link to comment Share on other sites More sharing options...
chem1st Posted January 4, 2011 Share Posted January 4, 2011 VAT, not at all. Inflation on the other hand, will. I will be buying less alcohol and brewing more. Consider, petrol. This past year it increased in price by over 20%, From just under £1 to £1.20 (2p was DUTY, VAT went back up to 17.5% from 15%, so perhaps 1/4 of that inflation was due to taxes and 3/4s commodity inflation). The past day or two we have seen 1p DUTY and an effective VAT rise of 2.13% aswell, giving us 3.13% (~3.5p/L) petrol inflation already this week, and that's all taxes. However, the proportion of the money you spend on petrol that goes to the treasury is actually less now than what it was last year. Because the commodity component price of petrol has increased faster than the tax increases have. Inflation is here. Add 20% to you foodbill to account for inflation, that's going to come quicker than you think (Most food is VAT exempt so that's a bonus). And ask yourself. If prices have gone up 20%, am I getting paid 20% more. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.