Campaign to extend the VAT holiday

[Gromit]

VAT cut must be extended, business leaders and MPs say
The temporary VAT cut, which will save an average of �475 for every household, must be extended beyond the end of the year, business leaders and MPs have said.

Alistair Darling's reduction, annoyed most shopkeepers, upset about the administrative burden and the relatively modest trim.

However, the majority � if through gritted teeth � admit it has helped their business, with the High Street holding up remarkably well.

The think tank Centre for Economics and Business Research point out that while June's retail sales, announced yesterday, indicate a rise of 2.9 per cent compared with a year ago, over in America high street spending has fallen by more than 10 per cent. Shoppers in the States have not benefited from any cut in sales tax.

http://www.telegraph.co.uk/finance/newsbysecto r/retailandconsumer/5895354/VAT-cut-must-be-ex tended-business-leaders-and-MPs-say.html

While most people were sceptical of the move to reduce VAT to 15%, it appears to have been successful.
Should it be extended further or scrapped asap?

[hc4361]

I don't think it would make a difference. I have spent money because I have no choice, not because VAT rated goods are 2.5% cheaper.
To save �475 the household would have to spend �19000 on VAT rated goods and services. I hardly think that is average.

[ludwig]

I can't believe it's had any effect. No-one's gone out and bought a shirt because it's �23 instead of �23.50 as a result of the VAT changes.

The reason they've bought the shirt is because the shop has discounted it from �40 to �20 in the first place. Any extra disposable income that the VAT cut generated has been spent on buying food, paying utilities or just shoved under the mattress, and has been too small for most people to notice anyway.

If we're ever going to start paying back the massive debts the government has run up, this is probably a good place to start.

[jake-the-peg]

It doesn't make a direct affect on people thinking "I must buy this because of the VAT Holiday"

But if they find they have a few hundred quid in their pocket over the year many will spend it.

In fact they're more likely to spend it if they *don't* notice it.

And don't forget Ludwig the reason that many of us still have jobs and a roof over our heads is precisely because the Government has run up these massive debts!

Go over to Ireland and look at the size of the dole queues over there!

[ludwig]

Like I said, I think any extra money people saved would soon have been soaked up higher utility bills, food prices, council tax, petrol etc.

By all accounts lack of confidence has meant people still in a job have been holding off on the big purchases (car, holiday, furniture, electricals) and treating themselves to a meal out or an extra bottle of wine to drown their worries.

That hasn't done much for the economy. If high street spending is still strong it's because shops have been discounting massively to stay in business.

[youngmafbog]

Like they are going to 'find' a few hundred quid in their pocket. To gain this much they must have a large disposable income so wont notice anyway.

I fail to see how anyone can say it has helped. The huge price cuts by the stores have helped mind.