VAT reduction ‘had little or no impact’

Darling’s recession-tackling measure blasted by customers
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In a study of 2,000 consumers, 88 per cent felt that last year’s VAT cut had little or no effect on their spending, as reported by The Retail Bulletin.

The survey, commissioned by PricewaterhouseCoopers, investigated the impact of the VAT reduction from 17.5 per cent to 15 per cent at the end of last year.

Eight per cent of those surveyed said that they had spent more due to the reduction; five per cent of which spent ‘a little’ more, and three per cent spent a lot more. The remainder said they were unaware that the rate had been cut.

"These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers' spending has been unaffected by the VAT cut,” said PricewaterhouseCoopers tax partner Stephen Coleclough.

“The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their New Year sales in anticipation of a VAT increase in January."

In July Tesco called for a delay in the VAT rise scheduled for January 2010.

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