You underestimate the stupidity of the consumer

So here's how it goes now:

The "rich" pay higher income tax to compensate the government for the 2.5% decrease in VAT.

Then, the price of goods falls according to the VAT. However, your average Joe or Josephine is never going to work out whether they have decreased the prices accordingly so many shops will get away with making, say, a 2% decrease initially. You won't tell the difference. Round up here or there.

So, now they start advertising 10% off for a limited time only, reducing the true price by 5 or 7%. You don't really know whether this is true or not, as you are confused by the original price with full VAT, what it should be with the new VAT, and whether the 10% off includes the old or new VAT. So you trust them.

Then, once the sale period is over, it goes back to the full price. Which is as much, if not slightly more, than you were paying before the VAT decrease.

This is how retailers disguised increased profits, and created Euro-inflation when we introduced the Euro.

Posted By: Steve in Holland on November 24th 2008 at 13:34:38

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