Told you so

Shoppers in hundreds of stores have seen no change in prices as retailers ignore the lower rate of tax. Other companies are not passing on the cut across their full range of products but are introducing larger cuts on a handful of items instead.

Did tell you that the 2.5% cut in hte VAT rate wouldn\’t makemuch difference to consumers. It\’s bolstering retailers\’ margins instead.

4 comments on “Told you so

  1. OK, but if retailers’ margins are boosted, that means that more retailers will stay in business for longer, there will be a greater range of goods available and that will all be good for consumers too.

    A deadweight loss is a deadweight loss, reducing it is a benefit for all, and we are all consumers eventually.

    Would be better if we weren’t building up quite such an unsustainable deficit, admittedly…further deadweight losses will be introduced in due course.

  2. As many people observed, the 10%, 15% 20% discounts the shops implemented off their own bat didn’t do much for trade, so how Gordon thought 2.5% (which actually was a 2.13% reduction) was going to help I know not.

    As for the retailers keeping it, they are doing exactly what everyone else is doing: grabbing every penny they can to try and undo the consequences of their own stupid behaviour over the past decade. The banks are using the increased interest differential to increase their asset base against bad debt. The public and the retailers are frantically paying off as much debt as they can.

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