Shops warning on new VAT cut

VAT was today cut on thousands of goods – creating a logistical nightmare for shops all over the region.

The Government hopes the 2.5 per cent cut will encourage people to spend more, stimulating the economy. But shopkeepers today spoke of the difficulties of passing on the change – and some said they simply would not bother.

Retailers will face a £300 million bill over the coming two years as a result of the reduction, as they have to change price tags and accountancy systems.

It is estimated that the change, which will last 13 months, will cost the Treasury around £12.5 billion.

And while it will save the average earner around £170 a year, critics have warned that it will have limited effect on shoppers, who already have the pick of several pre-Christmas sales.

A £550 flat-screen TV was today £11.62 cheaper after the VAT cut, a £300 washing machine was £6.38 cheaper, and someone buying a £15,000 car was today saving about £375.

Most small shopkeepers in the region today said they would be attempting to take the VAT off at the till, rather than change hundreds of price tags in store.

Aaron Sheldon, from Bojangles jewellers in Market Place, Wednesbury, said he would eventually change the tags on all items but it would take several hours. He said: "It has thrown everyone's prices out. Everyone's working on prices like £9.99 so with the cut it goes down to £9.77."

At Critchleys Hardware Store, in Bradmore, Wolverhampton, staff faced with the prospect of changing VAT on 300,000 products have given up.

Owner Kevin McNish said: "We would have to shut the shop for a week to change the tags over, and it would be a pain working out the new prices. What we have decided to do is donate £25 of every £1,000 spent to County Air Ambulance.

"If people moan at the till, we will knock the VAT off."