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Entrepreneurs doubt small firms will pass on VAT cut

by Catherine Woods - Monday, 24th November 2008

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“I don’t see how most small businesses will benefit from this,” he says. “I don’t think we’ll get any impact from that. If we look across our retail accounts, there are 25 per cent discounts that don’t have the same impact as they did a year ago; 2.5 per cent isn’t going to do anything and I believe a whole heap of smaller retailers won’t pass the saving on.”

Ferrier believes the administrative burden of changing prices such a small amount will discourage smaller retailers from bowing to Chancellor Alistair Darling’s demand they pass on the saving to consumers.

He says the government would have been better off reducing income tax.

Martin Warner, the founder of new business networking platform Talkbiznow.com, adds that the VAT measure isn't specific enough.

He says: "Unfortunately in a market where prices are pressed and large discounts are already being passed on, 2.5 per cent isn’t going to be noticeable. Small businesses are already discounting way beyond 2.5 per cent."

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Tags: entrepreneur, alistair darling, bulldog, vat, small businesses, recession, chancellor, income tax, rhodri ferrier,

3 Comments

December 12, 2008 3:04pm
Darren Pearce Says:

3 weeks after the announcement on VAT and very little has changed in the retail sector. The country's finances are a mess and set to get worse. The VAT change has had a negligible effect. Tax cuts & taxation incentives would have been one way help soften the economic crisis, instead we have devalued the currency and shown our economy to be one of the worst placed to recover from the downturn. Our government didn't save in the good times and therefore have no margin for movement in the bad times. Darren Pearce,CEO, www.volomed.com

November 28, 2008 8:51am
Ian Hendry Says:

If this move isn't helping to pursuade people to buy, then it's barely helping the business owner. Ian Hendry CEO, WeCanDo.BIZ http://www.wecando.biz

November 25, 2008 3:38pm
Dean Says:

I want more money in my pocket in times like these, not the small hope that products will drop in price by 2.5 percent! this only helps the business owners, not the consumer!

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