New VAT rate move is insane – retailers
Jun 18 2009 by Iain Laing, The Journal
EMBATTLED retailers have called Government plans to return VAT to 17.5% on New Year’s Eve as insane.
Businesses fear that increasing the tax from its temporary 15% during the key sales period will cause chaos and put further strain on the struggling industry.
The British Retail Consortium (BRC), with a number of the country’s largest firms including Marks & Spencer, have urged the Government to postpone the rise for a month to limit disruption to the industry.
According to the BRC, the move could cost the sector around £90m and cause huge upheaval for firms which would have to reprice their products during such a busy time.
Sir Stuart Rose, executive chairman at M&S, said the timing of a return to the 17.5% rate should be discussed with retailers.
“Increasing VAT on New Year’s Eve is an insane time,” he said. “If the Government had any sense, they would delay it for a month. The tax rise is at the worst possible time – right in the middle of the sales period.”
The reduction in the rate of VAT came into force on December 1 last year as the Government sought to provide relief to a high street in meltdown.
It was hoped the move would entice customers back into shops, helping retailers who had been ravaged by a severe downturn in consumer spending on top of stalled credit access.
A spokesman for the Treasury said there were no plans to alter the 13-month scheme.
