4:00pm Wednesday 29th December 2010
By Allan Tunningley
BUSINESSES in Cumbria and the Dales fear the rise in VAT to 20 per cent next week will hit them hard.
A straw poll carried out by The Westmorland Gazette suggests most companies will pass on the two and a half per cent increase to customers, even though this could exacerbate already poor trading conditions caused by the recession and the long winter freeze.
Mark Fuller, co-owner of The Sun Inn, Kirkby Lonsdale, said: “We’ve got to put VAT up because there are so many other additional charges being placed upon us, such as fuel price increases, which put the price of food up.
“Inflation is going up and whichever way you go there’s nothing else you can do but put prices up. We’re in a situation that we can’t absorb things any more.”
However, at Country Harvest, the Ingleton-based shop and deli-cafe, director Mike Clark has vowed there will be no price increases due to VAT.
“We have just enjoyed another successful year with our visitor numbers up by nearly 4,000 to just short of a quarter of a million,” said Mr Clark.
“We want those customers to come back to us in 2011 so our way of looking after them is by not passing on the burden of the VAT increase.”
Builder Mark Downham, who runs Backbarrow-based M W Downham Ltd, said the VAT rise ‘adds insult to injury’.
Mr Downham, who employs three people, said he had ‘just managed to keep them going’ but the prospects for 2011 looked bleak.
Although new houses are exempt from VAT, most local builders carry out taxable building projects such as extensions and alterations, which can run into tens of thousands of pounds, so a two and a half per cent rise can add hundreds of pounds to a bill.
“The phone’s been quiet for two months now because of the general economic situation and I’m sure the increase in VAT has had a lot to do with it,” said Mr Downham.
However, the planned rise has provided a boost in sales for car dealers in South Lakeland, with customers bringing forward purchases to avoid the hike.
Geoff Stothert, group sales director at Kendal Motor Village, said: “We had our best ever new car sales in November and December, which we can only put down to the effect of the impending rise in VAT.”
And the increased activity could continue for a few more weeks.
Customers buying Citroen and Honda cars from the motor village will have an extra month before the VAT is put up to the new 20 per cent level.
“The manufacturers of these cars have decided not to impose the rise immediately to keep the job moving along after Christmas,” said Mr Stothert.
Thomas Flanagan, 64, of Kendal: ‘There is no point buying in bulk now as once VAT goes up it will be like that forever and you will pay full price next time anyway'.
Katherine Braithwaite, 50, of Cambridge: ‘I won’t be buying in bulk; there isn’t much we can do about the VAT. We will just have to ride the storm'.
Alan Monks, 62, of Lincolnshire: ‘It’s annoying but I suppose we have a big debt and we have to pay for it somehow and the Government has decided it’s with VAT'.
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