But will it actually have the desired effect and who will profit?
Large e-companies (such as Amazon) clearly will have no problems implementing and passing on the lower rate to their customers. However, the "very type of smaller business" most affected by the credit crunch will have a much harder time to implement and pass on the savings in the high street.
The cost to small businesses to implement the VAT rate change will be high compared to turnover and it will be unlikely that the customer will see benefit at the till. A product or service that has been pitched at £9.99 will not be marked down to £9.77 for long.
The VAT rate change is a negative way of dealing with credit crunch; it serves to illustrate the despair that the New Labour Government is in.
It is back to the OLD Labour days of the past. History does indeed repeat itself
