Indebted shoppers dodging imminent VAT rise

Monday 6th September 2010

Nearly half of shoppers are reportedly planning to cut back on life’s little luxuries to avoid the VAT increase in January 2011, according to the latest research.

An online YouGov poll for voucher code provider everydaysale.co.uk found that 43 per cent of shoppers are set to review their spending habits in a number of ways to combat the rise in VAT from 17.5 per cent to 20 per cent, which kicks in at the beginning of next year.

Luxury items look set to be the first to be crossed off the shopping list. More than one fifth (21 per cent) of respondents indicated that they will buy fewer high priced items when the tax increases, yet they have no plans to alter the everyday necessities they buy.

The survey also found that the end of the year looks set to be a busy time for retailers. Almost a fifth of consumers (18 per cent) plan to rush out and buy higher-priced items before the VAT rise comes in next January.

In the battle of shopper savvy sexes, men are more relaxed about the planned increase in the consumer tax, with 30% stating they would not alter their retail routine as a result, this is compared to 21% of women.

Some debt experts have warned that the rise in VAT may cause struggling families to become even more indebted, falling further into a debt spiral as living costs increase.

Bonn Chen, CEO of everydaysale.co.uk, agreed with this prediction, saying: “With consumers looking to pay off their Christmas bills, January is an expensive month for many as it is. The planned VAT rise will hit many hard-working consumers so it’s no surprise that many savvy shoppers are already looking at ways to protect their pennies.

“The recession has taught many consumers the art of shopping around to get a deal, so these skills look set to be put to good practice when the rise comes in,” he added.