Will VAT affect your spending?

Jeff Woodhouse · Jan 7, 2011

With the increase in VAT to 20% this year, will it affect your purchase of new tackle or not.

For example, a £100 rod will go up to £102.13, if it is apportioned directly.

However, since many dealers discount their items, will they not keep their reduced prices to a reasonable level and you won't get as much discount off the retail in future. Therefore, will you notice the VAT increase at all?

For example, a rod RRP £79.99 sold for £49.99 and will in future sell for say £51.50, You're still getting a discount of £28.49.

I suspect the same will go for many goods on the retail market so all this moaning and complaining by the other political parties and the media won't come to much in the end. Sure it will affect the retail price index, but that includes teh discount you get already. If retailers stopped discounting altogether, you would then notice an increase, a BIG increase.

Lets' face it, when the previous government REDUCED VAT by 2½% everyone asked what good that will do as it's nothing. so in view of the fact that a 2½% drop is nothing, what's an increase of the same (OK similar in cash terms)?

I just wonder how many like Bennetts are now going to close and will the increased VAT be blamed for their demise?

PS to Mods, be kind please, I don't intend this as a political thread, it's about tackle prices and the public's buying options.

Wobbly Face (As Per Ed) · Jan 7, 2011

All I can say is YES. Inreality vat has gone up 5% on some items if you include when it was reduced initially.
Items will need repricing, mainly upwards not to just cover VAT, but to cover other price increases in fuel, both for transport and heating. Add extra Council tax, and utilities. Most workers face a wage freeze if not wage cut. fishing club subs have all gone up, well they have for me. How much will EA liscence cost this year? Also increase in Angling Trust membership.

I have worked it out that my fishing, before travel, bait, tackle and any day tickets will cost me £4.50 per week over the year. Last year it was £3.85 per week. My wage has dropped by £6K this year through reorganisation and B*****d managers. Then I have to include travel when last year I could walk it to work.

No major tackle buying for me this year, local and club waters only.

S-Kippy · Jan 7, 2011

It will certainly affect people simply because things will cost more but taken in isolation a 2.5% increase is not very much...£25 on a grand. It might make you think twice about major purchases but I'm inclined to agree with Jeff...what it will mean in practice is a reduced discount on major purchases.The real impact will be felt on the stuff that you dont have much choice over paying for.

But all our 2.5% extras will add up to a significant chunk of additional tax revenue though PAYE still generates more revenue than all the other taxes put together....and by some distance. Raising Income Tax is a political suicide bomb but the facts are that however unpopular raising direct tax is it will produce a lot more revenue than indirect tax and its easier to collect.

I will be thinking hard about holidays & trips away this year...really hard but with a daughter at Uni it wont really be the extra 2.5% VAT that puts me off...its the rest of the bill !

Jeff Woodhouse · Jan 7, 2011

Jeff Woodhouse said:
I just wonder how many like Bennetts are now going to close and will the increased VAT be blamed for their demise?

Just better correct one thing before anyone else jumps on it.

Bennetts did not close because of an increase in VAT, they closed long before the new VAT came into effect.

S-Kippy said:
The real impact will be felt on the stuff that you dont have much choice over paying for.

That's correct Skippy.

Fuel, ther's always a peak on fuel prices in winter, I never can understand why, but this together with the VAT is making things very difficult for anglers right now. It means they will look twice as travelling distances for their fishing, working out at £1.239 per litre (cheapest I've seen) comes out at £5.63 per gallon. Trips of over two gallons will be well considered, I reckon, although it's probably only a pound more than the same trip would have cost last summer and it will come down again around April time.

But then what will that add to our grocery bills when it goes on delivery costs.

nick dv · Jan 7, 2011

Personally, I don't think it's gonna affect me too much as I have no intentions of purchasing anything of high value, so I am just gonna carry on as normal and not think about it too much. I am more concerned about the cost of fuel for getting to fishing places. I saw one petrol station selling diesel at £1.37/litre yesterday. I also wonder when if ever the vat will return to 17.5%!

Cheers, Nick

The Monk · Jan 7, 2011

Its the price of guitars that worries me

Jeff Woodhouse · Jan 7, 2011

nick dv said:
I saw one petrol station selling diesel at £1.37/litre yesterday. I also wonder when if ever the vat will return to 17.5%!

WOW! That's £6.23 a gallon - e-x-p-e-n-s-i-v-e-!

No, I doubt it ever will. The French have had it at 19.6% for donkey's years and other countries it's even more.

Portugal - 23%, people don't complain when they holiday there.
Denmark 25%, Poland 22%, Norway and Sweden 25%, Hungary 25%, Greece 23%, Ireland 21%, Germany & Netherlands 19%, Romania 24%

But - Malta and Spain 18%, Cyprus 15%, and heres the place to move to - Switzerland 7.6% if you like chocolate and cuckoo clocks.

chav professor · Jan 7, 2011

its the ultimate tax hike. insignificant in any single purchase - potentially crippling over the term of a year. but it won't affect my purchasing of fishing tackle, probably have to travel less for my fishing

S-Kippy · Jan 7, 2011

I think "crippling" is a bit strong Christian...yes we'll all notice it because of the accumulative effect of all the extra pences here & there but when it went down to 15% were we suddenly all quids in ? No...we hardly noticed. Prices generally are rising.Petrol eg is now dearer than when we were nearly rioting in the streets but that's more about the poor old petrol companies than the rise in VAT. Look at the BP share price....9 months ago they were finished now look at them.

I'm afraid fuel [to go anywhere let alone fishing] is something I have to have so I buy some when I need it...like bread & milk etc. I dont shop around...if I need it I get some and it will be the lifts back to Uni for beloved daughter that go...not my fishing trips.My 2 year wage feeeze is going to hit me hardest...but on the bright side I'm already 6 months into it so there's only 18 more to go. Hurrah !

This isn't a practice. I'm 54...if not now...when ?

---------- Post added at 19:28 ---------- Previous post was at 19:22 ----------

The Monk said:
Its the price of guitars that worries me

Ha ha ha...brilliant. That's a man who has his priorities right !

flightliner · Jan 7, 2011

My tackle dealer told me that maggotts are to remain at £2-00 per pint-- good man! One dealer I used to use charged £2-20p per pint- or £1-20 per half pint, asked why not £1-10 he said it was for the extra handling. Never went back but i see this morning he has raised his prices.He can keep em for all I care!

Ray Daywalker Clarke · Jan 7, 2011

IMO the whole thing about VAT is wrong.

When it fisrt came out it was for items of so called luxury, now it's on just about everything you buy.

Petrol is the biggest government money maker, 2 thirds is tax, and the litre is another thing, it sounds cheap at £1.37 a litre, but call it a Gallon at £6.70 and that is realy taking the Pis*.

It will depend on what, and how much you buy as to how much extra you pay, but the facts are it will cost everyone extra, but we all know that dont we.

mol · Jan 7, 2011

I'd guess most shops will not pass it on, I bought some stuff from Ted Carters and they have an ad on the web-site about not passing the VAT increase on. I can't see items that costs say 49.99 going up.

S-Kippy · Jan 7, 2011

Actually VAT replaced Purchase tax in 1973 and the standard rate was then 10%. A higher rate of 25% was introduced on "luxury" items which was subsequently halved to 12.5% and the standard rate fell to 8 % before the luxury rate was abandoned and replaced with a flat 15%....which then rose to 17.5% which is what its been for some years until they started tinkering about. We've also had a rate of 5% introduced on electricity/gas.

So...although they are not common there have been a number of variations in the VAT rate over the years and we've always coped as we will again this time.Its still not as high as in many other EC states and in the UK govt's have always tried to strike an acceptable [to the public] balance on taxing income [direct tax] and taxing spending [indirect tax]. Direct tax is Income tax,NI conts etc...Indirect taxes are VAT,Excise duties etc.

Food is still zero rated for Vat purposes though as one of my "customers" pointed out the fuel to cook it isn't so the Govt was effectively taxing his breakfast. He had a point but we nicked him anyway.

I shall shed few tears for the tackle dealers.I know what the margins are and if they want to stay competitive they will have to price their stuff accordingly. Look at how much variation in price there is on the same stuff from dealer to dealer.They are just going to have to work a bit harder to get my money. A certain model of rod/reel is the same wherever I buy it so [like books] the ONLY issue for me is availability & price. I will support my local shop whenever I can but not if he's £20-£25 dearer & driving a Range Rover Sport.

Jeff Woodhouse · Jan 7, 2011

flightliner said:
maggotts are to remain at £2-00 per pint

Blimey! Life isn't half cheap oop Norf! £3.00 darn 'ere!

I thought it was earlier than 73, the year before, Skippy? Maybe you're right, are you in that line?

I remember having to account for the purchase tax in the company I worked the first year I did it, I reconciled it to within 6d (2½p) of the sales ledger and the tax man didn't believe me. I spent the next 3 hours going through records to convince and at the end he said he wouldn't have minded it being £6 out, but 6d sounded too precise. Cheeky git!

stikflote · Jan 7, 2011

Im in the fortunate position,that i do not need major items of tackle,

so all i,ll be buying is bait and bits of terminal tackle,
but the fuel is making me consider were i am going fishing from now on,
i will definitely not be traveling as far as last year 50,60 miles ,
this year im looking at 30 miles there and back,already turned down some matches,ive been invited too ,which in itself is not a big deal because ,i no longer want to fish matches

S-Kippy · Jan 7, 2011

I joined HMC&E in 1975 and I'm still there so yes,you could say I'm "in that line".The UK started getting ready for it in 1972 but VAT was introduced on 1st April 1973.

HMC&E merged with the Inland Revenue to form HMRC 4 years or so ago [seems longer I can tell you!] but I am and always will be a "Cussie".

Paul B · Jan 7, 2011

Am I right in thinking petrol is taxed and then vat applied meaning we are paying tax on a Tax?
Sure I read this in a breakdown of the price of a litre of fuel somewhere.

904_cannon · Jan 8, 2011

I'm sure a few retailers will use it as an excuse to hike up prices

I bought 3 packs of printer paper from Tesco yesterday at a cost of £2-40each, a few weeks back they were £1-98. That is over a 20% increase, not a 2.5% VAT rise

I suspect lower priced items of tackle will attract a bigger increase than the higher priced items.

I remember when we went decimal, a pack of Polo Mints went up from 2d to 2p

S Kippy, You have my sympathy, my sons mate works for HMC&E and they were really struggling before these latest reductions in 'waste' i.e. peoples jobs. But hey, were all in it together, aren't we?

matthew barter · Jan 8, 2011

I don't think the rise in VAT will make much difference. The fact is so many people are either out of work or scared of being out of work.
I work in the public sector. It used to be known for low wages, good holidays and security.
We don't think we're secure any more (750,000 the predicted job losses.).
It's difficult to believe that for those of us that are pushed out that we're going to get jobs in the private sector.
I haven't heard that it's going so great there. My friends and family that work for themselves or for private companies are finding things just as hard if not more difficult.
Put tax up or bring it down if people aint got it or think they might not soon they wont spend.
A sad situation that shouldn't have happened. Sorry to everyone in a worse hole than me. From no fault of myself or theirs they can't spend money.

Please help people if you can! It could be you/me next. It's not fair it's life.

S-Kippy · Jan 8, 2011

Paul B said:
Am I right in thinking petrol is taxed and then vat applied meaning we are paying tax on a Tax?
Sure I read this in a breakdown of the price of a litre of fuel somewhere.

Correct....and that is true of any item subject to Excise duty such as fuel,booze,fags etc.The excise duties are applied first and then the VAT. Excise duties are levied on the quantity/strength and VAT on the value.

The Public sector is in for a right battering. I expect no sympathy but there is an awful lot of nonsense written about public sector workers.The majority do very difficult & stressful jobs for not much money & no thanks at all.The Daily Mail would have you believe otherwise but it simply is not so.

I'm no economist but IMO this lot are trying to do too much too quickly and there is a real danger that it will backfire.What is the point of raising Indirect taxation if by doing so you suppress spending ? Add to that job losses and spending is suppressed even further,revenue streams shrink and we are worse off than we were. All in it together ? Dont make me laugh.

Will VAT affect your spending?

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