Up until this budget I had thought that the government were acting in a fairly sensible way to try and mitigate the effects of the recession and that there seemed to be some sort of cross party unified approach to getting us out of it.Here in the bookshop the budget doesn’t really effect anything much as books don’t carry VAT, however the most expensive part of the budget in terms of what the government has borrowed on our behalf is the cut in VAT.
It did occur to me though that this will be a very difficult and expensive reduction for many retailers to implement, I reckon that the paperback fiction in the shop runs to about 15,000 titles most I believe are priced at £1.99 consider the logistics of reducing them to £1.94.
Looked at another way say I am going to buy a new computer that is £400, will it being £390 make any difference?
While in a broad sense I am in favour of doing something but the VAT cut suggests a complete misunderstanding of how retail pricing works. Much of the thing is about thresholds, i.e. trying to get it under a particular round amount.
I will give you an example of what I mean using a book off the shelf, as steam boats are very much on my mind I have chosen; Turbine Steamers of the British Isles by Nick Robins.
The book was published to sell at £11.99 obviously the publisher was getting below the £12 threshold here. I managed to buy the bin end of it 10 copies for £30 and am selling it at £4.99 to get below the £5 threshold, 12 ½ p in this equation doesn’t really get you anywhere.
I am afraid the only way that I can see that this could possibly work, is that if the government is going to borrow n thousand pounds on behalf of every family in the country for repayment in 2011, 12, 13…………., would be to send us all a cheque for whatever it is, and a letter begging us to go out and spend it.
