Newspaper article Evening Gazette (Middlesbrough, England)

Shoppers Ignore the VAT Increase

Newspaper article Evening Gazette (Middlesbrough, England)

Shoppers Ignore the VAT Increase

Article excerpt

Byline: SUE SCOTT ; KELLEY PRICE

THE VAT hike appeared to have had little impact on shoppers on Teesside as stores prepared for a predicted bumper spending spree in the run-up to New Year. Most retailers and suppliers said the 2.5% cut in the goods tax last December had failed to stimulate footfall. But as VAT returned to 17.5% on Friday they cautioned against any further rises in the spring Budget.

Meanwhile, some Teesside stores have reported fantastic trading in the week between Christmas and New Year.

Experts had forecast a rush to the tills on December 31 as consumers brought forward big buys to beat the VAT increase from 15% to 17.5%.

Tom Powell, manager of Middlesbrough's Panasonic store in Linthorpe Road, said the VAT cut had made a "massive difference" to his trade over the past 12 months. "We plan to keep VAT down until current stock is exhausted. There is extra work involved with the changes, but it has helped with sales so it's worth it."

But Mark Pearson, owner of Pearsons TV and Electrical in Stokesley, said the VAT giveaway had not increased consumer spending.

"It's just created a massive amount of red tape," he said. "Having to implement the change down, then up, has created confusion and extra work for retailers."

Andrew Boyes, MD and chairman of retailer Boyes, which opened an outlet in Middlesbrough last year, said the VAT cut had been a waste of time. "It didn't do anything to improve demand at our end of the business -it was just a logistical nightmare." The firm said it would phase in the 2.5% rise and swallowthe difference, but cautioned strongly against further increases.

"In the state the economy was in, it didn't make much difference but bringing it up above previous levels would be very negative," added Mr Boyes.

James Barker, MD of furniture retailer Barker and Stonehouse, said: "We took the VAT down on our prices, but it didn't make an overnight difference. …

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