Is anyone else in two minds about the proposed VAT increase to 20%?    I realise the absolute necessity for the coalition government to raise revenue etc, but I have some concerns about the proposed increase.

When VAT was reduced by 2.5%, this reduction was tiny compared to the 20%-40% discounts that many retailers were offering during the recession. So there is an argument that many retailers will just absorb the 2.5% cost increase – so what’s the big deal?

However, one sector where retailers cannot absorb the VAT increase and where consumers cannot avoid purchases is petrol and diesel. You cannot stop drivers on the roads as most people need to get from A to B. The argument here is that the increase in VAT will take money out of the economy because drivers will have to make cutbacks elsewhere.

I would be interested to hear from anyone with views on this.

Please note the views expressed in this blog are the views of the author, Andre Brown and do not necessarily represent the view of Locayta, its employees or its shareholders. For more information about Locayta, visit www.locayta.com