The Great VAT Scam!

[CliffordAlls]

I know someone who works part time for one of the big supermarket chains. One of his jobs is pricing. Food etc is exempt from VAT but there are exceptions, e.g, chocolate, booze and tobacco.

He tells me that when VAT was temporarily reduced to 15% last year the chain concerned did not reduce its prices on such items in line with the concession. All they did instead was increase their prices/margins on VATtable products at the expense of the VAT element - a shift in the ratio if you like - so they remained ostensibly the same for you and I.

Now that VAT has returned to its original rate of 17.5% their prices have again remained the same, the price adjustment simply being reversed. I'm wondering whether any retailers that used this ploy are now going to boast that they have absorbed the VAT increase. I also wonder whether any using this ploy have decided to really cash in on the concession and pass the VAT increase on without reversing the adjustments previously made, thus preserving their resulting enhanced margins on such products permanently.

As I say, this practice only applied VATtable stuff, such as chocolate, booze and tobacco....at Christmas....what a windfall for retailers! What a way to abuse the fiscal policies of Government and add a nice chunk of taxpayers' money to their profits!

Greed....it is our national shame.

[JSMod]

When HMG reduced the rate of VAT, did they really expect it to be passed on to the consumer? Of course, some traders did so. M&S gave refunds at the till, as did Wilkinsons, another large retailer in my area. A few (very few) reduced their posted prices. But in any case, the reduction was small - a mere 2.12%.

To put it in perspective, if your shopping basket of goods (excluding food, remember), came to £100 before, then it would have been £97.88 after the reduction. Hardly enough to make you go out and spend, spend, spend, was it? You'd have to spend almost £1000 to make a £21 saving, and that's not the sort of difference that would encourage you to splash out on a new plasma TV. But, for the shopkeeper, it was a real boon. By not passing it on, he got the benefit of everybody's spend, of £10, £100, or whatever. It therefore helped the shopkeepers compensate for the reduction in their turnover (and hence profitability) caused by the recession.

In view of accounting problems caused by the change, and the minimal effect it had on consumers, I'm not a bit surprised that many shopkeepers didn't pass on the savings. And frankly, I don't think HMG expected them to.

In a similar vein, do you remember how the price of chips used to change? We used to comment that when there was a potato shortage, and potato prices rose, so did the price of chips - but when potato prices fell, the price of chips remained the same. All chippies should be millionaires by now!

[Big Frog]

The biggest swindle to me, was when the chancellor reduced the VAT rate he added 2p to fuel duty to compensate (ie; to not lose out). When the VAT went back up it obviously did so on fuel. To me the whole operation appears to have been a back door way of getting another rise on fuel duty The price of fuel is rising again at an incredible rate and is only 20p off reaching the astounding levels reached during the conflicts. It also beats me how they can charge you VAT on fuel duty. The more they put it up, the more VAT they incur too.

[Big Frog]

The temporary reduction in VAT cost the major retailers a lot of effort in repricing their stock and resetting their VAT levels. They were forced to do this.

Most high street stores HAVEN'T now repriced their stock because it is more bother than it is worth. They are merely letting the VAT man take a bigger cut of the profit.

[Darlekman]

Yes once again as people have found we gor ripped off with VAT, it still stayed at the same price on heating and lighting and telephones too, I expected my mobile monthly payment to have a lower monthly payment, but no I was wrong like BT it stayed at 17% each month.
Sorry folks we live in the UK, so we live in rip off britain, even VAT on parcels did not go to 15% either.
The rest of the Europe know that where money is concerned the UK is quite an easy push-over for rip offs.

[Big Frog]

Originally Posted by Big Frog

The biggest swindle to me, was when the chancellor reduced the VAT rate he added 2p to fuel duty to compensate (ie; to not lose out). When the VAT went back up it obviously did so on fuel. To me the whole operation appears to have been a back door way of getting another rise on fuel duty The price of fuel is rising again at an incredible rate and is only 20p off reaching the astounding levels reached during the conflicts. It also beats me how they can charge you VAT on fuel duty. The more they put it up, the more VAT they incur too.

There is now a petition to get the 'temporary' duty increase removed.

To recap, when VAT was temporarily reduced to 15% last year, the Chancellor added 2% duty to fuel to offset the reduction in tax collected from motorists. Now that VAT has been increased to 17.5% again this hidden tax has not been removed - hence recent rises in your fuel costs. Sign the petition at the link below to have this stealth tax removed!


http://petitions.number10.gov.uk/DutyReduction/

Sign it now, promote on Facebook and pass this on to your friends - the more the merrier. Happy motoring!