Posted by : Tom Doyle in (Other, Technology & Home Entertainment) 3rd Dec, 2008
VAT down (UK) : prices down on play.com, well not really…
Tagged Under : Christmas, Online shopping, Play.com, Playstation, Retail, United Kingdom, Value added tax
I wrote an article on Monday about some online stores not reducing their prices in conjunction with the recent VAT reduction in the UK. Original article here >>
Today it seems Play.com have reduced their price on one of the mentioned items; that is the Playstation bundle. So if you are planning on buying a PlayStation for Christmas - follow this link - and not the one posted on the original article - £10 cheaper today! 
The other items mentioned in the original article have yet to see a reduction in price. Surely this is illegal?
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Nice… However I don’t think it is illegal as retailers are not obliged to pass on any savings in vat to the consumer. Well not really… let me rephrase:
If you buy an item for $5 and lets say the VAT is $1 of that. Say the government goes crazy and drops vat by half… to 50c. The retailer does not have to sell it for $4.50, they can still sell it for $5.00 as long as the government gets their 50c. The company just makes more profit on each item.
That said, they should drop their price to be competitive but if they think they still are competitive then they aren’t going to reduce prices.
Hi Dan,
Thanks for stopping by. Fair point I guess, I think it’s something that should be policed though. What’s the point in the government offering a reduction in VAT, to stem consumer spending I might add, to see it being soaked up by the retailer.
I guess you could say the retailer is being silly too, but they are in it for the money at the end of the day….
Very true - they are in it for the money. And Its up to each retailer to decide how competitive they are and whether their sales are enough to keep them going. That means that if they think they can survive without passing on the savings then they will.
In the end I think its the mainstreet shops that will need to pass this on more than anyone else and its there that the UK will see any kind of spending boost.