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VATs the way to do it!

January 2nd, 2009 · Posted by Skuds in Politics · 5 Comments · Politics

Before Christmas I ordered some stuff from Argos – a bed and various bedroom furniture for Frankie’s new flat.  I think it was ordered in November for delivery in December after he moved in.  Today I received a letter from Argos telling me that the rate of VAT was reduced between the time of ordering and delivery and that they wanted to pass the saving on to me: enclosed was a £10 gift card.

Totally unnecessary, but very welcome.  As another retailer says “every little helps”.

Which makes me wonder what our councils are doing…

Councils charge for various services, and some of these charges attract VAT.  There are tickets for council-run theatres and leisure centres and refreshments at the same places for a start.  With the temporary reduction in VAT they can either pass that saving on by reducing prices accordingly, or they can leave the prices as they are, pay the reduced VAT and thereby increase their revenue.  They could give the money back indirectly in a council tax rebate or they could just treat it as a windfall.

Some local authorities have taken the VAT profit and donated it to charity, others have reduced their prices. I have not seen what West Sussex, Crawley or Horsham councils have done.  Nothing particularly wrong with any of the options, but it would be nice to know what they are doing.

Will WSCC use the windfall to let them have a below-average council tax rise this year?  They usually have a lower increase in the years there is an election, thinking that nobody will notice the co-incidence, so this could make it more affordable.  Maybe they will just use it to give the leader and cabinet another large pay rise this year?

As for Crawley and Horsham – how about signing up to the government’s free swimming scheme?  They could put the VAT profits to one side in case it does involve any extra cost like they say it will (a peculiar effect that only seems to affect West Sussex councils.  Nearly everywhere else in the country is either not affected or considers it not significant.)

Just a thought.

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5 Comments so far ↓

  • skud's sister

    We went to Bath for a few days just after the VAT rate went down. When we arrived they gave us a rate card which had the room rates slightly higher than I was quoted and the final bill just had a line for VAT and didn’t quote the rate. I had the original email with the old room rates on with me but Rob wouldn’t let me argue with them….

    Lots of information here
    but the main upshot seems to be that although the Government expects the rate cut to be passed on they cannot dictate to businesses (or Councils?) what prices to charge…

  • Gert

    My local council leisure centre has a sign up saying that as its prices are already 0% VAT there will be no price reduction

  • scop

    It does seem disturbing to hear that councils are doing this. The whole point was to reduce the cost for the consumer, more money in their pockets and more to spend. The real reason would probably be that they are incompetent or lazy. The rest of the business community had to pay in extra work and costs to make the change that it seem they could not be bothered with. The excuses are twaddle.

  • skud's sister

    The VAT reduction only applies to items which were rated at 17.5%. It doesn’t apply to any other rates (reduced or zero) so it is not a case of people being swindled out of money they were owed. I work for a bookstore and books are zero rated – we are not shortchanging anyone by not reducing the prices of books (although, of course we have reduced the prices on any full-rated items such as stationery and greetings cards).

  • Skuds

    Sussex Stationers are very clear in their shops, with signs saying how the prices of cards, paper, pens, etc. will be reduced at the tills but books are zero-rated so will remain the same.

    Many council services will be zero-rated too, but many are not or else how would these other councils have surpluses that they are issuing press releases to say they are giving them to charity?

    Gert’s local leisure centre may not have VAT on the price of entry, but if they have a cafe, vending machines for Red Bull & Lucozade, or a shop selling sports equipment/clothing there will be something they are paying VAT on.