Speculation about Alistair Darling’s pre-budget decrease in VAT had us all on tenterhooks yesterday morning. However, much to our surprise (no leaks in this direction) he partnered the 2.5% decrease in VAT with an 8% increase in the rate of excise duty on wine. The effect of this rise is to more than offset the decrease in VAT, so there is no saving on drinks to pass on to the customer. To quote the pre-budget report:
The Government will increase the overall duty on alcohol from 1 December so that the total VAT and duty remain broadly unchanged following the reduction in VAT to 15 per cent. The increase in duty will be maintained when the VAT rate is returned to 17.5 per cent in January 2010
While perhaps slightly disappointing from one point of view, it does mean that there is no reason to hold off from stocking up for Christmas. Unlike electrical retailers (which must be pretty quiet this week – would you want to buy a television today when you know it’s likely to be significantly cheaper next week?) we can now concentrate on getting ready for the December rush. Our message – it’s business as usual. Do your bit and get out and shop!