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Business News HMV Timeline Retail
HMV to pass on VAT cut
By CMU Editorial | Published on Wednesday 26 November 2008
HMV has promised to pass on the reduction in Valued Added Tax to consumers.
As you may have seen, Chancellor Alastair Darling has announced he will cut the VAT rate from 17.5% to 15% as of Monday in a bid to encourage consumers to continue spending despite the pending recession. Of course retailers who actually charge the VAT to customers could continue to charge the same unit price for things and pocket the VAT saving themselves.
But HMV have said they will pass the saving straight onto consumers meaning an £11.99 CD will now sell for £11.74. That said, it is likely price labels will continue to say £11.99 for a while, despite the price cut. Though that’s a nice thing, it means a pleasant surprise when you get to the till. Just don’t get giddy with joy and waste the 25p on a Fudge bar and a Chomp will you?
The music seller said in a statement yesterday: “We are pleased to confirm that the reduction in VAT to 15% will be passed on to customers at the point of purchase, and this will be communicated throughout the store and in our advertising. Although we are passing on the VAT reduction at the point of sale, the re-stickering of our entire stock would represent an enormous undertaking for our sales staff at this very busy time of year, so the prices shown on our product packaging will for the time being remain unchanged”.
In related news, the slightly pessimistic PRS collecting society has said it doesn’t expect the VAT cut to have any real impact on music business, which figures because you’d have to buy a lot of albums for all those 25p savings to add up to anything near enough to justify buying an additional album. All the saved money will probably end up being spent on Fudges and Chomps. Which means Cadburys win again. Damn them.
