VAT "reduction"

opinion guy · 04-07-2011 3:34pm

I didn't even know there was a VAT reduction until I was looking at a menu of a cafe today and waitress told us they had passed on the VAT reduction - said only them and mcdonalds had done so

westendgirlie · 04-07-2011 3:41pm

TouchingVirus wrote: »

You might know what it means, but you sure don't know how it works if you think businesses are obliged to pass reductions on

Businesses can either reduce the gross as the VAT rate for the service has decreased or, they can raise the cost of said service.

If your receipt still says 13.5% then they are breaking the law. If it says 9% then they just took the opportunity to raise prices. No real incentive for the cash strapped consumer to purchase off them then :rolleyes:

smash · 04-07-2011 3:52pm

westendgirlie wrote: »

Businesses can either reduce the gross as the VAT rate for the service has decreased or, they can raise the cost of said service.

If your receipt still says 13.5% then they are breaking the law. If it says 9% then they just took the opportunity to raise prices. No real incentive for the cash strapped consumer to purchase off them then :rolleyes:

Nobody's talking about them breaking the law by not implementing the new rate, just about passing on the savings.

If the saving isn't passed on then it doesn't really matter that much to the consumer because the saving is tiny. If it helps keep a business going then fair play.

Carter P Fly · 04-07-2011 3:57pm

A buisness keeping its prices up does not help it keep going. Reducing prices where it can to entice people to spend rather then save will keep the buisness going.

The irish seem to think that getting more money per transaction is more important then having more transactions resulting in more money in the longer run.

smash · 04-07-2011 4:01pm

Carter P Fly wrote: »

A buisness keeping its prices up does not help it keep going. Reducing prices where it can to entice people to spend rather then save will keep the buisness going.

The irish seem to think that getting more money per transaction is more important then having more transactions resulting in more money in the longer run.

2 years ago I could walk into a pub and have a carvery meal for around €12. Now I can get one for around €7. If they pass on the saving then it will be cheaper, if they don't it's still a cheap meal and I wouldn't be arsed arguing over it.

westendgirlie · 04-07-2011 4:04pm

Well i think as a consumer that I would go with the business that is better value for my money ie: the one that kept their NET price the same.

And if I were a business owner, I would be asking myself "how can I generate more business?" Increasing my NET price just because the VAT went down isn't really gonna entice the customers through the door.

TouchingVirus · 04-07-2011 4:16pm

You have net and gross mixed up, no?

Gross + VAT = Net
Same Gross + Reduced VAT = Reduced Net
Increased Gross + Reduced VAT = Same (or increased) Net

Dublin Chick · 04-07-2011 4:17pm

TouchingVirus wrote: »

You have net and gross mixed up, no?

Gross + VAT = Net
Same Gross + Reduced VAT = Reduced Net
Increased Gross + Reduced VAT = Same (or increased) Net

smash · 04-07-2011 4:17pm

westendgirlie wrote: »

Well i think as a consumer that I would go with the business that is better value for my money ie: the one that kept their NET price the same.

And if I were a business owner, I would be asking myself "how can I generate more business?" Increasing my NET price just because the VAT went down isn't really gonna entice the customers through the door.

So if there were 2 cafe's and one reduced their price and it was now €5 for a sandwich but the other didn't reduce and their price was €4.50 would you go to the €5 place because they reduced with the new VAT rate or would you go with the €4.50 place and complain that it's should be cheaper?

westendgirlie · 04-07-2011 4:22pm

TouchingVirus wrote: »

You have net and gross mixed up, no?

Gross + VAT = Net
Same Gross + Reduced VAT = Reduced Net
Increased Gross + Reduced VAT = Same (or increased) Net

Eh?

NET + VAT = Gross

Dublin Chick · 04-07-2011 4:26pm

westendgirlie wrote: »

Eh?

NET + VAT = Gross

You would have thought so....

westendgirlie · 04-07-2011 4:27pm

steve06 wrote: »

So if there were 2 cafe's and one reduced their price and it was now €5 for a sandwich but the other didn't reduce and their price was €4.50 would you go to the €5 place because they reduced with the new VAT rate or would you go with the €4.50 place and complain that it's should be cheaper?

Depends on the Sandwich

This is all about generating business and tourists.

"Welcome to Ireland... we were giving a VAT reduction so that we could entice more vistors with cheaper rates. But sod you tourists, we're keeping the difference for ourselves so if you wanna come over, pay what ya did before"

TouchingVirus · 04-07-2011 4:30pm

Dublin Chick wrote: »

You would have thought so....

With salaries you get a gross wage, PAYE etc is deducted & the amount paid to your bank account is the net wage. It seems I was slightly confused, and you are correct. Net price is ex vat.

BlaasForRafa · 04-07-2011 4:31pm

steve06 wrote: »

2 years ago I could walk into a pub and have a carvery meal for around €12. Now I can get one for around €7. If they pass on the saving then it will be cheaper, if they don't it's still a cheap meal and I wouldn't be arsed arguing over it.

In that sense €7 isn't cheap though, its just what the price should have been all along.

smash · 04-07-2011 4:32pm

westendgirlie wrote: »

Depends on the Sandwich This is all about generating business and tourists.

"Welcome to Ireland... we were giving a VAT reduction so that we could entice more vistors with cheaper rates. But sod you tourists, we're keeping the difference for ourselves so if you wanna come over, pay what ya did before"

But doesn't it all depend on how inflated the prices were to start with? Because these days they're actually not that inflated.

BlaasForRafa wrote: »

In that sense €7 isn't cheap though, its just what the price should have been all along.

This attitude that businesses shouldn't make money really needs to stop. If people were selling products or services at nearly cost price then nobody would survive.

westendgirlie · 04-07-2011 4:37pm

steve06 wrote: »

But doesn't it all depend on how inflated the prices were to start with? Because these days they're actually not that inflated.

This attitude that businesses shouldn't make money really needs to stop. If people were selling products or services at nearly cost price then nobody would survive.

But at no time does a business profit from the VAT element. So, in my humble opinion a reduction in the VAT rate should have no effect on a businesses net price. If they are struggling as it is how do you think they will generate more income by increasing prices?

westendgirlie · 04-07-2011 4:41pm

TouchingVirus wrote: »

You might know what it means, but you sure don't know how it works

Wanna take that comment back now?

TouchingVirus · 04-07-2011 4:53pm

westendgirlie wrote: »

Wanna take that comment back now?

Nope

You stated as a fact that businesses were obliged to pass on VAT reductions, which is incorrect. Then when you were corrected, you just said you knew what VAT was

You can tell by my Gross vs Net comment that I was unsure, that's why I said I thought you had it wrong.

westendgirlie · 04-07-2011 4:57pm

TouchingVirus wrote: »

Nope You stated as a fact that businesses were obliged to pass on VAT reductions, which is incorrect. Then when you were corrected, you just said you knew what VAT was

You can tell by my Gross vs Net comment that I was unsure, that's why I said I thought you had it wrong.

Errr, Yes, yes they do have to pass on VAT Reductions. They cannot charge you more than the legal VAT rate. That is the law :rolleyes:

I thought we sorted the NET, VAT, GROSS bit and where the place where the increase has to happen! Thank God it's hometime

bamboozle · 04-07-2011 5:06pm

westendgirlie wrote: »

Eh?

NET + VAT = Gross

other way around, net is after deductions.

TouchingVirus · 04-07-2011 5:17pm

bamboozle wrote: »

other way around, net is after deductions.

It's different when tax is added onto a product.

For your wages it's Net Pay = Gross Pay - Tax but for Products/Services it appears to be Net Price + Tax = Gross Price (what you pay is Gross, not Net). Caught me on the hop too :P

Sarn · 04-07-2011 5:20pm

TouchingVirus wrote: »

It's different when tax is added onto a product.

For your wages it's Net Pay = Gross Pay - Tax but for Products/Services it appears to be Net Price + Tax = Gross Price (what you pay is Gross, not Net). Caught me on the hop too :P

They're both the same.

Edit: Just to clarify. We pay gross but earn net as pointed out. But the calculations are the same.

BlaasForRafa · 04-07-2011 5:29pm

steve06 wrote: »

But doesn't it all depend on how inflated the prices were to start with? Because these days they're actually not that inflated.

This attitude that businesses shouldn't make money really needs to stop. If people were selling products or services at nearly cost price then nobody would survive.

Businesses should make money of course....but they shouldn't profiteer, like a lot of irish businesses were doing during the "boom" period.

TouchingVirus · 04-07-2011 5:40pm

Sarn wrote: »

But the calculations are the same.

Ah yeah, calculations make sense but the terms can be a bit confusing if you associate net with "Final total" like I did

Gross = Net + Tax is the same as Gross - Tax = Net

Micky Dolenz · 04-07-2011 5:57pm

ebixa82 wrote: »

They pay a reduced VAT rate to the tax man but are not obliged to pass on the reduction to the customer. People can charge whatever they want for whatever service they provide.

e.g. if a room costs 50e and the reduction makes it 48e they can still charge 50e, they can even charge 60e.

You need some basic lessons in how the process works!

Yes, but the new tax level must be shown on a receipt if you ask for one. If it is a the old level, they are breaking the law.

smash · 04-07-2011 6:43pm

westendgirlie wrote: »

But at no time does a business profit from the VAT element. So, in my humble opinion a reduction in the VAT rate should have no effect on a businesses net price. If they are struggling as it is how do you think they will generate more income by increasing prices?

Because if they reduce the vat rate, which they legally have to do, but don't adjust the already low price to pass on the savings then they're making more money and the consumer isn't really being done. I'm talking about current prices here, not boom prices.

PrincessPixie · 05-07-2011 9:38am

Hi does anyone know if Greyhound Waste are passing on the VAT reduction? Just topped up the bin account and it's still showing as 13%

Apanachi · 05-07-2011 9:54am

PrincessPixie wrote: »

Hi does anyone know if Greyhound Waste are passing on the VAT reduction? Just topped up the bin account and it's still showing as 13%

The reduction doesn't apply to waste disposal

neil_hosey · 05-07-2011 10:10am

would it apply to the deli counter in a shop??

Apanachi · 05-07-2011 10:14am

neil_hosey wrote: »

would it apply to the deli counter in a shop??

it applies to the hospitality and tourism sectors, so yea, it should apply to the deli counter

VAT "reduction"

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