Reply to: VAT and Tesco

[NickFitz]

The obvious proof that retailers never cut their prices in line with the VAT decrease was that all prices still ended 99.

Some of the large stores continued to display the price as if the 17.5% rate was still in effect, then applied the deduction at the till. M&S did this on clothing, household goods and so on. I suppose it's a lot less hassle to simply program the PoS systems to apply a fixed discount to all sales than to find and change all the places 17.5% is used in the various systems in use.

[SantaClaus]

The obvious proof that retailers never cut their prices in line with the VAT decrease was that all prices still ended 99.

[AtW]

I was in Tesco this morning, and there were signs on the tills saying: "On 1st January 2010 the treasury increased the VAT rate to 17.5%".

I'm no grammar expert, but it seems to me they were using the past tense to describe a future action.

And from 1st of january you'd complain that they talk about present (and later past) date using future tense?

[Zippy]

I filled up at Sainsbury's 45 min ago. didn't look at the price

Flash contractor git!

[Diver]

I just filled up while I was at Sainsbury's: 105.9p/litre. I have no idea if this price has changed since I last filled up just before Christmas.

I filled up at Sainsbury's 45 min ago. didn't look at the price

[NickFitz]

I just filled up while I was at Sainsbury's: 105.9p/litre. I have no idea if this price has changed since I last filled up just before Christmas.

[Numpty]

Are you suggesting Tesco would artificially increase the price of something just so they could reduce or freeze it at a future date in order to claim they are doing consumers a huge favour?

Daily Mail:

The VAT-freeze illusion: Stealth rises cancel out stores' big tax promise

High Street stores have imposed thousands of price rises ahead of the VAT increase that comes into effect tomorrow.

Some of them claim to be protecting shoppers against the increase – but in recent weeks they have put up the prices of many products that carry VAT.

Leaked figures show that stores such as Tesco, Boots and Morrisons have increased prices on a raft of products, including pet food, confectionery, and beauty products.

But there are mounting suspicions that retailers have used the one year reduction to boost profits at the expense of shoppers.

Many stores did not pass on the cut in lower prices, while others made only temporary reductions.

All the major supermarkets – Tesco, Asda, Sainsbury's and Morrisons – have enjoyed bumper profits in the past year at a time when some customers have struggled to put food on the table.

Tesco is advertising a £12million VAT freeze, so apparently offering a helping hand to hard-pressed shoppers. It also promoted 5,000 price cuts in the run-up to Christmas. But the Daily Mail has learned that the chain increased the price of 1,577 popular items – some 6.3 per cent of its range – in December.

The Tesco increases included 500 items that are subject to VAT including bedding, cooking equipment and crockery.

But the industry data shows it has increased the price of more than 1,500 product lines by an average of 2 per cent in the last 12 weeks.

Tesco insisted its price changes had 'no link whatsoever' to the VAT increase. It said: 'We work hard to keep prices down for customers which is why we have frozen VAT on thousands of products at the lower rate of 15 per cent. This is on top of 5,000 price cuts over the last two weeks with average reductions of over 10 per cent.

Telegraph:

Retailers' 'VAT freeze' is phoney, rivals claim

Major retailers – including Tesco – have pledged in recent days to freeze prices when VAT is increased from 15 per cent to 17.5 per cent on January 1, with shops absorbing as much as £100 million of price rises.

But according to industry data, leaked by a major retailer and seen by The Daily Telegraph, the price of thousands of products have been increased over the last eight weeks – prompting accusations that retailers have increased prices ahead of announcing of the "freeze", thereby ensuring they do not lose out from keeping prices unchanged in January.

For example, Tesco claimed yesterday to be freezing the price of Fairy non-biological at £4.50 as part of a “£12 million VAT freeze” on thousands of products. However the data shows that the non-biological washing powder was selling for £4 in October. "

[Alf W]

Are you suggesting Tesco would artificially increase the price of something just so they could reduce or freeze it at a future date in order to claim they are doing consumers a huge favour?

[HairyArsedBloke]

I was in Tesco this morning, and there were signs on the tills saying: "On 1st January 2010 the treasury increased the VAT rate to 17.5%".

I'm no grammar expert, but it seems to me they were using the past tense to describe a future action.

They must have forgotten to put a sign up and when they found out later then used Threaded time machine to come back to put one up. However, because they hire a bunch of chavs (which is the reason why they ‘forgot’ in the first place) they use a sign that made sense in their own time, but ‘forgot’ it was going to be seen in the past. You just can’t get the staff.

[Numpty]

My wife informs me Tesco (amongst others) promised to absorb the VAT increase and not pass it on to customers.

By putting the price up today, they will be able to fulfil that promise.

So you misunderstand the situation: Tesco's are doing it because they love you.

Link:

Fake freeze?
Supermarket giants Tesco, Sainsbury's and Asda have all said that they will delay passing on the increased rate on thousands of products.

But Tesco has been accused of raising prices ahead of the tax rise.

A report in the Daily Mail claims that Tesco, Boots and Morrisons have all increased the prices of certain items in recent weeks.

Tesco told the newspaper its price changes had "no link whatsoever" to the VAT increase.

[VectraMan]

I was in Tesco this morning, and there were signs on the tills saying: "On 1st January 2010 the treasury increased the VAT rate to 17.5%".

I'm no grammar expert, but it seems to me they were using the past tense to describe a future action.

[Zippy]

Isn't that illegal?

I think they can charge what they like as long as they don't call it VAT. If I were a cynical person, I'd suggest they've put up the price to what it will be after the VAT increase(plus a little extra for themselves) so they can absorb the extra VAT increase until the end of Jan. Then they could add another 2.5%.
I'm not a cynical person, so I guess it must be an oversight.

[Numpty]

Isn't that illegal?

They can charge what they like, provided they keep proper records and pay the right VAT.

They are probably just cynically ripping off all the people waiting until this evening to fill up with petrol that is only hideously expensive rather than at tomorrow's utterly insanely expensive price.

[JonSmile]

they can get away with it as a inc vat price - the fact that they decided to increase their prices by just over 2.5% is just coincidence

today the receipt will say 15% and tomorrow 17.5%
but the gross amount will be the same

[BrilloPad]

Isn't that illegal?