David Fiske Affiliate Marketing & Web Development

The drop from 17.5% to 15% in VAT, in my opinion, has been a complete waste of time.

The reduction was made on 1st December 2008 and since then, I've yet to see prices fall, suggesting that some retailers are now absorbing the extra 2.13% reduction as profit.
 
From a shopping perspective, CDs and DVDs still cost much the same as they did before Christmas. I've not bought anything large enough to notice the VAT reduction.

From a wedding perspective, everything has been pre-paid months ago. I did manage to wangle a £10 refund on the catering though.

From a business perspective, I've just had to print 35 pages of credit notes and fresh invoicing at the lower rate. Net result is I get a credit of £5. The cost is that I've had to print said invoices out, costing ink and paper as well as time.

So overall, the move that was supposed to get me spending (I'm spending less now than I was 12 months ago ironically) has made me £15 less printing costs and lost time. Lets call it a comfortable refund of £10.

So, thanks Alistair Darling for changing my life and giving me more money to spend - on one CD. My advice is that the VAT rate is a complete waste of time as it benefits larger businesses. It's save my business a whopping £5 (less printing costs) so far.

A cleverer way to put money into people's pockets is to play with the PAYE / self assessment system - perhaps offering an increase in personal allowances. This would see less tax being clawed in by the tax man giving most working households more money within a month of the change.

I remember there being an issue with this idea (raised during the 10p tax band fiasco) which is why, I suspect, the VAT rate was tweaked, passing on the majority of "change costs" to businesses.

Thanks again Alistair. I look forward to the furore that will occur when the VAT rate goes back up to the previous level or higher and as businesses have to write yet more cash off in making price changes.