Retailers adopt different tactics over VAT rise

31st Dec 2009 10:36

Shoppers hit the high street today for last-minute bargains ahead the VAT rise tomorrow but face confusion in the new year as retailers adopt different tactics to the tax rise.A number of high street chains said they will delay raising the VAT for the time being, while others are freezing the rise on certain products only. VAT was reduced to 15% by the government last year to boost spending in the recession and is due to go back up to 17.5% tomorrow.The Centre for Economics and Business Research estimates the VAT cut helped boost consumer spending by £6.8bn but warned the increase could deter shoppers and make it tough for retailers, who face an increase in the tax and rising inflation.Supermarket giants Tesco, Sainsbury's and Asda said they will delay passing on the increased rate on thousands of products.Department store group John Lewis said it will not raise until at least the beginning of February, along with Argos, which will wait until its new catalogue is published to save costs. Boots said it will "gradually increase" prices.Sir Philip Green's Arcadia Group stores, which include Top Shop, Dorothy Perkins and Miss Selfridge, as well as Bhs, will also absorb the VAT rise.But Homebase, which along with Argos is part of the Home Retail Group, will be raising VAT on its goods from the beginning of January, as will Marks and Spencer.