VAT "reduction"

Sala

The rate of VAT fell from 13.5% to 9% on Friday on certain goods and services - eating out, hotels, hairdressing, newspapers.

I stayed in a hotel at the weekend and was charged the booking price- no reduction. I bought lunch today, and a coffee elsewhere- no reduction (I know this for a fact as I buy the same coffee everyday and it's still the same price.)

Newstalk presenters were encouraging consumers to ask about the reduction and put pressure on the owners/management who are pocketing the excess.

Has anyone here seen any reductions so far, or asked about them? I'm interested to hear how you got on! Would you avoid the places that are not passing them on or do you care?

snubbleste

This is Ireland, what did you expect?

Sweatynutsack

My hairdresser is a MILF so she can charge me all the VAT she wants

Kojak

Even if they pass on this reduction to consumers, they will make it back in other ways. New charges on items that weren't charged for before.

These business are not going to try and deliberatly loose out on more money if they can help it. This "reduction" is all on paper, just to give people the idea that they are getting value for money, but in reality they are still getting fleeced.

ebixa82

They are not obliged by law to pass it on.

As one business man said he was gonna use the reduction to employ an extra member of staff.

The phrase "vote with your feet" is being used repeatedly. If you are not happy then avoid that particular bar/restaurant/hotel.

westendgirlie

ebixa82 wrote: »

They are not obliged by law to pass it on.

As one business man said he was gonna use the reduction to employ an extra member of staff.

The phrase "vote with your feet" is being used repeatedly. If you are not happy then avoid that particular bar/restaurant/hotel.

Of course they are obliged by law! It's tax and isn't their money!

smash

A pub I was in on Saturday night has a sign up saying "5% VAT reduction on all carvery food."

Vicxas

Mcdonalds dropped 25 cent on most of their stuff.

smash

westendgirlie wrote: »

Of course they are obliged by law! It's tax and isn't their money!

A business can charge what they want! Just because the government reduce their tax take it doesn't mean the business has to reduce their prices.

PCPhoto

the VAT rate fell on Friday and you waited all weekend before posting about it !!!

As miley would say on Glenroe .... "well.... holy God !!"

stephendevlin

westendgirlie wrote: »

Of course they are obliged by law! It's tax and isn't their money!

They are not obliged by law to drop thier prices. They are now obliged by law to pay a lower rate of tax.

ebixa82

westendgirlie wrote: »

Of course they are obliged by law! It's tax and isn't their money!

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!

Sweatynutsack

Vicxas wrote: »

Mcdonalds dropped 25 cent on most of their stuff.

So is a double cheeseburger now €1.75 ???

please say yes

westendgirlie

steve06 wrote: »

A business can charge what they want! Just because the government reduce their tax take it doesn't mean the business has to reduce their prices.

Yes, a business can charge what they like. But in order to charge on 1st July what they charged on 30th June, they would have to increase their prices.

westendgirlie

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!

I know what VAT is ta very much

BaconZombie

Yes but they have to change the price and change 5% on the new price.
Ask for a VAT receipt and it they change more them 5% they are breaking the law.

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!

Jimmy Two Times

Difficult one this.

We all know that there are many businesses hanging on by a thread,who will be looking at letting more staff go and who really need this extra few Euro to stay in business.

I'd be happy enough to keep paying current prices for the various services affected by the V.A.T. reduction if it ensured that more people kept their jobs and businesses were able to keep going.

In reality a reduction of € 3.17 in the price of an € 80 hotel room or a saving of 10 Cent on a bag of chips isn't going to mean a huge amount to any individual, whereby the total savings on the part of the business concerned might just make the difference between staying in business or clising the doors.

neilthefunkeone

Ive seen a few places dropped their prices over the weekend.. Some will just up their base price to make it the same as before... Could be costly for some business's to re-print menus and have signs redone and such..

Irish Slaves for Europe

The reduction in price for most items would be so small that most people aren't going to notice one way or another if prices have been lowered. This tactic is destined to fail, if anything the government should of added on 4.5% to the VAT rate. People are just buying the bare necessities at the moment and will continue to do so until the debt crises in Europe has been solved. Its far from solved at the minute and whats worrying is that there is no real desire being shown by Europe's leaders to solve the problem either. They are content to continue with the stop gap measures currently being implemented.

Berkely

Glasson House hotel near Athlone passed on the vat reduction on weddings at the weekend and all accommodation bookings. Great to see.

smash

westendgirlie wrote: »

Yes, a business can charge what they like. But in order to charge on 1st July what they charged on 30th June, they would have to increase their prices.

No their prices haven't increased. The government just gets less of a take. Their prices have only increased for you if you're keeping receipts and claiming the VAT back.

Berkely wrote: »

Glasson House hotel near Athlone passed on the vat reduction on weddings at the weekend and all accommodation bookings. Great to see.

Nice first post Mr Glasson

Sweatynutsack

Berkely wrote: »

Glasson House hotel near Athlone passed on the vat reduction on weddings at the weekend and all accommodation bookings. Great to see.

You know what they say about people in Glasson houses??

Ooops wrong saying

Up de Barrs

So the government have raided people's pension to increase the profit margins of restaurants. Well done Enda.

jester77

Vicxas wrote: »

Mcdonalds dropped 25 cent on most of their stuff.

that must have messed up their euro saver menu... or do you get an extra pickle now?

Mark200

snubbleste wrote: »

This is Ireland, what did you expect?

I've heard of loads of places that have passed on the VAT cut, so eh...

Kojak wrote: »

Even if they pass on this reduction to consumers, they will make it back in other ways. New charges on items that weren't charged for before.

These business are not going to try and deliberatly loose out on more money if they can help it. This "reduction" is all on paper, just to give people the idea that they are getting value for money, but in reality they are still getting fleeced.

Businesses don't "loose out on money" from a cut in the VAT rate.

Vicxas

Sweatynutsack wrote: »

So is a double cheeseburger now €1.75 ???

please say yes

A big mac was 25 cent less so maybe?

JONJO THE MISER

Im going to supermacs soon and if they havent droped the price of there snackbox from 7 Eur to 6.65 Eur there will be trouble and i will be asking to see the manager.

westendgirlie

Help me out here cos I must be losing it......

eg: An hotel cost €100 on 30th June and also cost €100 on 1st July.

30/06/2011 - Net: 88.10
VAT: 11.90
Gross: 100.00

01/07/2011 - Net: 91.74
VAT: 8.26
Gross: 100.00

In light of the lower VAT rate and in order to keep the same gross, have they or have they not increased their price?

mikom

Sala wrote: »

The rate of VAT fell from 13.5% to 9% on Friday on certain goods and services - eating out,

Correction.
Oral being a professional service is at the higher rate of 21%.

jester77

westendgirlie wrote: »

Help me out here cos I must be losing it......

eg: An hotel cost €100 on 30th June and also cost €100 on 1st July.

30/06/2011 - Net: 88.10
VAT: 11.90
Gross: 100.00

01/07/2011 - Net: 91.74
VAT: 8.26
Gross: 100.00

In light of the lower VAT rate and in order to keep the same gross, have they or have they not increased their price?

Maybe you get 5% better service from July

TouchingVirus

westendgirlie wrote: »

I know what VAT is ta very much

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

opinion guy

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

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

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

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

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

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

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

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

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

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

westendgirlie wrote: »

Eh?

NET + VAT = Gross

You would have thought so....

westendgirlie

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

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

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

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

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

TouchingVirus wrote: »

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

Wanna take that comment back now?

TouchingVirus

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

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

westendgirlie wrote: »

Eh?

NET + VAT = Gross

other way around, net is after deductions.