VAT reductions in effect at hardware etailers, but is the saving enough?

by Parm Mann on 1 December 2008, 10:57

Chancellor Alistair Darling announced late last month that VAT rates would be cut from 17.5 per cent to 15 per cent as of December 1st. The change, which lasts until December 31st 2009, is in place to encourage consumers to spend more and in turn boost an ailing economy.

Shortly after the announcement, various high-street retailers took it upon themselves to incorporate the lowered VAT rates late last week - hoping to entice consumers quicker than the nearest competitor. However, in terms of online retailers, we've been left wondering if the popular etailers would keep pricing intact in an effort to slightly improve margins.

Today, we've scouted big-name etailers such as Scan.co.uk, Ebuyer.com and MicroDirect.co.uk, and as you'd expect, all three are now listing items with VAT at the lower rate of 15 per cent. But are the prices really any lower? To find out, we're checking Scan.co.uk's pricing before and after the VAT reduction, and here's a brief breakdown:

Product	Scan.co.uk pricing before VAT cut (November 30th '08)	Scan.co.uk pricing after VAT cut (December 1st 08)
Intel Core i7 920	£236.37	£231.35
Intel Core i7 965	£855.60	£837.40
Intel Core 2 Quad Q9550	£270.23	£264.48
AMD Phenom 9950 BE	£157.44	£154.09
XFX GeForce GTX 260	£218.66	£214.20
HiS Radeon HD 4870 1GB	£228.19	£223.33
Corsair 6GB (3x2GB) 1,333MHz XMS3	£198.69	£194.47
Samsung Spinpoint HD103UJ 1TB	£77.54	£75.89

As always, UK-based HEXUS.community discussion forum members will benefit from the SCAN2HEXUS Free Shipping initiative, which will save you a further few pounds plus also top-notch, priority customer service and technical support backed up by the SCANcare@HEXUS forum.

The savings might not be enough to have us all reaching for our wallets, but they're certainly in place. Scan.co.uk's prices are approximately 2.5 per cent lower across the board.

Is the VAT reduction encouraging you to spend more? Share your thoughts in the HEXUS.community forums.

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It's nice to get an extra 2.5% off but unfortunately it's no-where near enough to encourage me to spend on PC hardware at the moment due the recent increases in UK prices due to the de-valuation of the pound against the US dollar.

The reduction is nice, especially since I was planning on building a new PC before xmas anyway.

Whether I'll regret not waiting a bit longer, further down the line, is something I won't know until then.

The cut in VAT encouraged me not to spend until it was in place, and I'll cheerfully pocket any savings it creates, but I certainly won't be buying anything I wouldn't have bought before as a result of it. It's nowhere near enough to induce me to buy anything I wasn't already going to buy.

So all it's done with me is perhaps to defer spending for a few days. And if the objective was, as the Chancellor and other ministers keep saying, to “stimulate spending”, then I think it's rank stupidity on their part. It makes trivial differences in cost to small items, and for big ticket items (cars, etc) either you're going to buy or you aren't, and a couple of hundred quid saved on ten grand or more, while nice, isn't going to make a blind bit of difference to whether I buy a car or not.

And, of course, for many retailers, it involves a right hassle and a lot of time and cost re-pricing everything and printing new labels, stinting stickers and notices about changes to pricing in catalogues etc.

Personally, I think the effect was supposed to be psychological, making things feel cheaper, to encourage confidence. Instead, all it really does is encourage people to realise just how deep a hole the government have dug for us when they publish borrowing figures like they did, when they tear up their own spending and borrowing “rules”, and when they signal that their giving us a bit of a sweetener now, and a flaming great tax bill in a couple of years time. It's a sugar-coating on some very foul-tasting medicine.

Oh, and instead of encouraging confidence, I think the net effect is scepticism, because the public aren't quite as gullible and stupid as Brown etc think, and a reduction in confidence because people are aware that if the government feel that this sort of unprecedented step is necessary, then the mess we're facing is really bad.

Small wonder, then, that the only poll I've seen so far about Brown's popularity and the trust people have in him over running the economy has seriously nose-dived since the P-BR. Not helping, of course, is that the government pump hundred of billions into a bank rescue package, but is there any sign of banks easing off on their lending squeeze, raising liquidity for small business or home owners? Precious little, if any. It hasn't worked. And nor will a trivial cut in VAT.

Whatever we do, the next few years are going to be painful. We're staring down the gullet of what might well be a very serious recession, we're staring down the gullet of the effect of excessive government and domestic spending for years, with the domestic bit encouraged by government (because they wanted the tax revenue), and now we get to pay the price.

Gee, thanks for that, Gordon. :rolleyes:

Samsung Spinpoint HD103UJ 1TB £77.54 > £75.89

A saving of £1.65?! I'm going to buy the company! And a George Forman Lean Green Fat Reducing Grilling Machine!

Guys, a 2.5% absolute shift on vat, doesn't equal a 2.5% relative shift in prices………….

I just wish sometimes ministers would have the spine to say “There isn't anything we can do” rather than waste money and make it worse. But in this case i think he believes his own spin.

VAT reductions in effect at hardware etailers, but is the saving enough?

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