Chancellor lets down retailers on VAT

09 December, 2009

Chancellor Alistair Darling has ignored calls for a delay in the reinstatement of the 17.5% VAT rate to ease the strain on retailers over the Christmas period.

In today’s Pre-Budget Report, Darling confirmed that VAT will return to 17.5% on January 1 having been reduced to 15% in November 2008.

The Association of Convenience Stores said the Chancellor had let down local shops, and that retailers were “exceptionally disappointed” by the decision not to extend the 15% VAT rate beyond January 1.

ACS chief execuitve James Lowman said: “The date of the increase does not give retailers adequate time to implement the changes over the holiday period and piles a major bureaucratic burden on retailers in what is the busiest time of the year.

“The immediate cost of the change will exceed £8 million across the convenience sector industry.”

The temporary reduction in VAT was accompanied by an increase in excise duty of 8% for wine and 4% for spirits. The Chancellor also confirmed that these duty increases will remain in place despite widespread calls for them to be rescinded once VAT returns to 17.5%.

Jeremy Beadles, chief executive of the WSTA, said: “Today’s confirmation that these tax increases will remain in place is disappointing for the trade and the millions of British consumers they serve, though sadly it is not surprising given the state of public finances.

“This means that since last year’s Budget excise duty has gone up by around 20% for wine and 16% for spirits - excessive increases at a time when most families are feeling the pinch.”

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Lifting the spirits

I were to sum up alcohol sales over Christmas 2017 in one word, it would be “gin”. At Nielsen, we define the Christmas period as the 12 weeks to December 30 and in that time gin sales were £199.4 million, which means they increased by £55.4 million compared with Christmas 2016. There’s no sign the bubble is about to burst either. Growth at Christmas 2016 was £22.4 million, so gin has increased its value growth nearly two-and-a-half times in a year. The spirit added more value to
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