association comment

Taxing times I

t has recently been suggested that VAT rates could be reduced or even removed for the most

“resource efficient” products as a way of promoting sustainability. Rates of VAT differ quite considerably

across Europe. There is an EU Directive which currently requires all Member States to have no more than three rates: a Standard Rate for most goods and services of at least 15%, and up to two lower rates for a set list of products. There is also a list of items that are exempt, such as postage stamps. There are proposals to amend the Directive: either allowing Member States to set whatever rates they like, or keeping the minimum Standard Rate but letting Member States decide which items to tax differently. Either risks making VAT rates even more variable which is not entirely in line with the idea of the Single Market.

AMDEA chief executive Douglas Herbison highlights discussions on how changes to VAT could encourage resource efficiency

Before the UK joined the EEC (as it was then),

the British Government levied a Purchase Tax of 25% on luxury goods. This was one of several taxes introduced during the Second World War to dampen demand at a time when factories were increasingly expected to manufacture items for the war effort. There were multiple rates and at one point some luxury goods were taxed at 100%. In 1973, the UK replaced the Purchase Tax

with VAT. At that time the Standard Rate was 10%. It has fluctuated considerably since, with different products being subject to higher or lower rates. There was a “temporary” increase to 20% in 2011

for most goods and services which is still in place. A lower rate of 5% applies to domestic energy supplies, children’s car seats, and equipment for disabled persons, among others. The UK also rates most food (both human and animal) and other items such as children’s clothes at 0%.

It is being suggested that lower VAT rates could be a tool to encourage a more circular economy. Levying less tax on products deemed to be more sustainable, or even total exemptions for the most “resource-efficient” products, would make such products appear cheaper to the consumer. However, there are three obstacles to

overcome. How would you avoid suppliers using the opportunity to increase their profit margins by keeping prices the same? How do you measure “environmental friendliness” accurately enough? And, possibly the greatest, how do you persuade your government to forgo tax revenue in the interests of saving the planet?

AMDEA is the UK trade association for manufacturers of large and small domestic appliances. It has 35 member companies who between them manufacture over 100 brands

‘Look at additional revenue streams’ Retra chief executive Howard Saycell asks if it is worth examining new strategies to combat the ‘discounting rollercoaster’


etailer fortunes across Black Friday and Christmas last year witnessed something of a turnaround on

the previous year. Christmas week 2016 returned to prominence as bigger than Black Friday, indicating retailers have found ways either to properly manage the activity or resist the temptation to join in. Across all retail, the December sales data from

the British Retail Consortium and KPMG showed a 1% rise in like-for-like sales. That is positive news indeed in light of the threatened economic gloom and consumer confidence crash that failed to materialise after the Brexit vote. That said, it was no surprise that in-store

sales fell 1.2% in total and were down 1.4% on a like-for-like basis. In contrast, online sales rose 7.2%. These are, of course, top line figures but do reflect what most of our members have been telling us. Will Black Friday decline in importance from

here on in? For some retailers it works, but I believe it would be no surprise to see others scale back involvement further or come up with alternative strategies. The danger for us in electrical retailing is that too much of our product is already sold

16 |

at discount prices. The run up to Black Friday is aggressively marketed by the big boys with promotions lasting a week or more. In some cases this then continues into early December. Others start their sale early which means

by the time December 26 comes around the consumer has been bombarded with offers for a month or more. Is it time to look at new strategies to combat this rollercoaster of discounting? As highlighted at our conference in October, members need to look at additional revenue streams. In-store finance and warranty sales are a very good source of additional turnover and margin, but members also need to diversify. The Smart Home remains the ‘next big thing’ and since conference we have been working with AWE and T21 on an exclusive programme for retra members. As an introduction to this exciting opportunity, we will be holding a ‘proprietor’s day’ on Tuesday, February 21, at AWE’s offices and showroom. This will be free to members and I would urge as many members as possible to attend. Contact the retra office for more information. Still looking to the future, I’m delighted to announce that we will once again be holding

our annual industry conference in October. The date is Tuesday, October 10. Continuing with the successful one-day format and gala dinner, the venue returns to the newly refurbished Royal Lancaster London Hotel. Along with the obvious focus on our own industry there will no doubt be much to discuss regarding the progress towards Brexit. Please do make a note of the date in your diary.

February 2017

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36