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I expect there'll be queues at filling stations today with motorists trying to beat the VAT increase.
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Damn straight, my tank is nearly empty and I'm not paying an extra £3.80 for nothing.
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Today? The increase is from the 4th Jan IIRC.
It actually only amounts to 2.5/117.5 so less than 2% or jnder £400 on a £20k car so not much to worry about on a tank of fuel.
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Exactly Cheddar. It's nothing to worry about at all I agree..... but the media will ensure that we are all suitably concerned which in turn will cause it to be a worry and it'll have exactly the opposite result to the effect intended. Retail sales will falter so the extra revenue it would have generated will not happen. All links in supply chains will be squeezed even harder to maintain today's falsely low consumer goods prices and the recovery will take even longer.
It's an ill thought out hare-brained plan. It would have actually made more sense to reduce the VAT rate again. Would've sparked up some spending enthusiasm.
However, what do I know, I am but a humble businessman, not one of those clever politicians.
Last edited by: Humph D'Bout on Fri 31 Dec 10 at 14:24
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Not only does the VAT increase on the 4th. but so does the fuel duty and you'll be paying VAT at 20% on that too! And the price of oil is still going up.
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I am so glad I got a cheap car to run now. If I had bought a 2.0 Focus I would have been stuffed. Insurance no doubt will go up for me by another £300 too.
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CV websites are reporting that diesel will be £6 per gallon.
Pat
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How does it work in the haulage company do they offset prices by buying a fortune worth in bulk?
But even then surely higher fuel costs mean higher food prices? Well we know that already but I have a feeling it will be the transport companies which take most of the hit, not the supermarkets or consumer.
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That explains why we had a huge fuel delivery of red diesel at work this week all tanks full.
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Most haulage firms will have completely full tanks in the yard before the increase, but that won't last long.
Some haulage contracts also have a built in fuel escalator where the price of 26 pallets to Scotland for instance, will go up along with the price of diesel, but certainly not all of them.
A lot of customers have now insisted on contracts without that built in and of course, if you refuse, someone else will always agree to it.
It will of course mean an increase in prices which is miniscule on a tin of baked beans, but taken as a monthly percentage of a lot of people's already stretched and depleting income, it will certainly be felt.
Pat
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>> Not only does the VAT increase on the 4th. but so does the fuel duty and you'll be paying VAT at 20% on that too! <<
I don't think VAT is applied to other duties.
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VAT is currently charged on fuel AND duty.
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No queues at our local. I filled the Ka without remembering about the fuel duty increase. I filled it simply to because the tank was nearly empty and our local filling station will be closed for a few days over New Year.
However, when purchasing a new vehicle, I did take the VAT rise into consideration.
:-)
Not that I saw a single other punter in any of the car showrooms that I visited.
I asked one salesman about the VAT increases, and he said that while Citroen had a special deal to hold the prices on certain vehicles, the others (and all used cars) would go up. I suppose that it is possible that some dealers will just find that buyers are not willing to pay the extra, and that the dealers will just have to absorb the increase in the short term.
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bottle of propane for work is now £60
it was £27 5 years ago
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I thought the duty went up tomorrow and then VAT on Tuesday.
The media is doing the country no favours with the VAt increase. The less intelligent members of society assume it makes a big difference but for something that was £100 now (incl VAT) it will be £2.13 more. So on a £1000 item you're talking about £20. If you can afford to spend £1000 then finding the extra £20 is not a problem.
But the media is making out how this is going to effect people a lot more than it is. The same as they tried to make out the drop to 15% made such a difference.
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"The same as they tried to make out the drop to 15% made such a difference."
Of course the difference was tiny but it did bring a smile to my face when say a M & S item priced and ticketed at £19.99 actually showed as £19.57 at the counter.
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you're talking about £20.
Well £21.28 actually. It might not be a huge deal for most but if say you are on a low wage with a take home of £15,000 per year and you spend a third of that on VAT items, then you have to find another £100 a year. In households where every pound is accounted for that's not always easy.
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£100 a year = 27p a day. One single cigarette costs 30-34p now. As a measure of perspective.
Not saying the increase won't be noticed but it'll be hyped beyond belief and its effect will be negated as a result of panic not-buying.
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"£100 a year = 27p a day."
Or to put it another way two weeks groceries for a family on low wages
Depends very much on your perspective and how much money you have. The increase will be felt disproportionately by those at the bottom of the ladder
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>>
>> "£100 a year = 27p a day."
>>
>> Or to put it another way two weeks groceries for a family on low wages
>>
>> Depends very much on your perspective and how much money you have.
It also depends on price increases of the goods being bought... down in the cheaper stuff I'd have thought that price increases by the manufacturer would far exceed the 2%ish VAT rise... Also how many people actually buy still at full RRP? Not many I'd have thought...
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I just happened to have just 25 miles worth of petrol in the tank according to the dash computer so it was fill it up time this evening.
I noticed little flappy adverts on the Shell station pump holsters " Fill it right up to avoid VAT increase".
I also noticed a big pool of green coolant on the forecourt alongside me. Not a good way to end the year for someone.
When I commented to the guy alonside he said " afraid it is from my car" and without any further action off he drove. I assume he is quite local.
I can only assume he thought that if he drives quickly he will get home before it all runs out.
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When oil hit $145 a barrel in the summer of 2008, a litre of diesel was around £1.30.
Today, oil is around $90 a barrel, yet we're paying £1.29 in most outlets within a 3 mile radius of my house (includes two big supermarkets, and I would estimate 5 other major chains)
This is before the duty and VAT go up.
Yes the cost increases due to the forthcoming hikes are trivial, but in the context of the past two years they are anything but. When we bought our diesel Golf in early 2009, it cost somewhere around £47 to fill up if filled at the earliest opportunity when the light came on. Today, same car, same refilling time, it's somewhere around £65!
A 38% hike by my remedial maths.
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I personally think that the vat increase on new cars will definately affect sales.If you think about it, £400-£500 increase on a £20,000 car might not sound too bad but that £500 is totally dead money.Imagine going into Currys for a lcd tv,handing over £500 and walking out with nothing.£500 is alot of money in anybodies book and i personally would be thinking twice before wasting that amount of cash when buying a new car.Therefore new car sales will plummet.
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>>A 38% hike by my remedial maths
Diesel has gone up by a good 30% here in NZ since April 2009 too. It's taxed less than in the UK, but the price is still starting to hurt.
VAT here was increased from 12.5 to 15% last October and the media have made a fuss (conveniently under-reporting the cut in income tax rates that also kicked in in Oct). But as others have said on this thread, those on very low incomes suffer most when VAT is increased.
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Diesel here, on the Costa del Sol, is now 1.21€ per litre; petrol a few cents more.
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When we bought our diesel Golf
>> in early 2009, it cost somewhere around £47 to fill up if filled at the
>> earliest opportunity when the light came on. Today, same car, same refilling time, it's somewhere
>> around £65!
>>
>> A 38% hike by my remedial maths.
>>
I recently found a photograph which I can reliably date to October 1996, which shows a garage forecourt in the background; unleaded fuel is 59.9 pence/litre.
So over fourteen years, the cost of petrol has more than doubled.
AS DP says, it's the recent acceleration which is scary.
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Just a gentle reminder that I am in fact arguing for a decrease in the rate of VAT but for slightly more complex reasons.
Undoubtedly the increase will be felt by the less fortunate more so than those on higher incomes at a personal level but for the vast majority its real effect will be minimal initially. We will all though be told to be worried about it so we will.
The real problem is the effect on business. The media will hype the general feeling that the increase causes everything to suddenly become unaffordable and this in turn will cause a slowing of consumer spending. The supply chain will be further squeezed to absorb the increase in prices. Many of those links are operating on single digit percentage margins as it is and simply won't be able to find or suffer the extra cost.
This will cause business failure and in turn further job losses compounding and accelerating the problem of reduced comsumer spending and there is a severe danger of uncontrollable downturn as a result. We will see many more businesses going to the wall as a direct result of this ill-conceived plan.
The additional revenue forecast from the increased rate of VAT simply won't happen because spending will fall and the benefit burden will increase due to resultant job losses.
In my opinion it would be far more sensible to reduce the rate of VAT, thus encouraging consumer spending and re-invigorating the economy with a flow of investable cash.
Without business, there is no economy.
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I so agree Humph. The media is hyping this to make many think things are getting unaffordable but the reality is nothing will change that much. But those with less income will feel this the most.
I'd have thought it would be better to just leave VAT at 17.5% to be honest.
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Yep agreed, 2011 could have been the year of gentle recovery. This short sighted panic measure will help to ensure it isn't. I've just had an email from a trade customer ( on New Years Day ) asking me for a discount on an existing contract so they don't have to raise their retail prices...
It has started.
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We actually seem to be coming more in line with VAT in Europe as per the EU's Sixth Directive. See:
www.scopulus.co.uk/taxsheets/european_vat_rates.htm
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Rate of VAT increase - Fursty Ferret
