VAT was the question again?

The more I think about it, the more I remain unconvinced that the cut in VAT announced by Alistair Darling will do anything to help put money into people's pockets.

I think big retailers will just quietly pocket the extra percentage and not bother to reduce prices, on the grounds that in three weeks, no one will notice. Sure, they will lose some sales because there are people who do shop around, but given that the difference is probably about £4.50 on a £250 purchase (a laser printer, for example) they know that with a gross profit margin of 30% you can put your prices up 10%, lose 25% of your customers, and still make the same gross profit, and they ain't gonna lose anything like 25%.

If you are a major office supplies organisation, mentioning no names, with an annual turnover of £114M, then keeping the prices the same and pocketing the difference is worth £2.1M pa to you, whereas individually in one-off consumer purchases, they will hardly notice they are going to be ripped off.

I suppose in a situation where big high street names are feeling the pinch - Woolworths has gone, PC World Dixons Currys are posting profit warnings, we should be grateful that the extra turnover might tip the balance and safeguard some jobs, but even there, I hae me doots.

So, tinkering round the edges and unlikely to work. Especially since the duty on fuel will be increased to compensate for the VAT cut, and the energy companies will carry on bleeding us white. At least Dick Turpin wore a mask.