VAT reduction has had very little impact on consumer spending so far research finds Thu, 27th August 2009 VAT reduction has had very little impact on consumer spending so far research findsThursday August 27th 2009
Nearly nine in ten consumers say the VAT cut has had no effect. The reduction in the rate of VAT from 17.5% to 15% late last year has had little or no impact on consumer spending, according to research commissioned by PricewaterhouseCoopers. In a recent survey of over 2,000 consumers, a massive 88% of those polled said that the VAT change had not caused them to increase their spending on goods and services over the last few months and that the VAT change was insignificant compared to other factors such as reduction in income or uncertainty about the economic situation. Only 8% said they had spent more as a result of the reduction, with 5% spending a little more and 3% spending a lot more. The remaining 5% of those asked were not aware of any VAT change. Stephen Coleclough, tax partner, PricewaterhouseCoopers LLP, said: "These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers' spending has been unaffected by the VAT cut. "The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their New Year sales in anticipation of a VAT increase in January."
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