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V12 2009 INDEX       E-SYLUM ARCHIVE

The E-Sylum: Volume 12, Number 5, February 1, 2009, Article 26

IS U.K. COIN GLUT AN UNINTENDED CONSEQUENCE OF A TAX CHANGE?

Dick Johnson writes:
British officials lowered the Value Added Tax (VAT) last year. This set off a chain reaction. To wit: causing citizens to be required to carry more coins in their pockets, causing more wear to the pockets, causing a glut of pocket repairs by London dry cleaners, causing dry cleaners to complain to the press.


It would appear that some consumers' pockets are being worn thin by the sheer weight of coins that they now have to carry around with them.

By reducing the rate from 17.5 per cent to 15 per cent in his November Pre-Budget Report, the Chancellor caused retailers to reprice their goods, from round figures to oddly-priced sums. So a 10 jumper is now 9.79.

A 4.99 item, which would previously have called for just one penny in change from a 5 note, will now cost 4.88, increasing the demand for change.

Egin Eshref, a leading London dry cleaner who owns the Spots chain, said that he had noticed far more customers coming into his outlets asking for their half-pockets the small coin pockets on many trousers to be mended.

"It's very noticeable. We haven't been mending these pockets for years, but there's been a real pick up in people asking for them to be replaced or strengthened," he said.

He added that in recent years his company had almost stopped doing this type of repair because hardly any of his customers used the half-pocket, thanks to the increasing use of debit cards.

Many retailers have complained about the logistics of the new VAT rate, which has not only seen them print new price labels, but also caused them to stock more small coins in their tills.

Simon Hargraves, commercial director at Pret a Manger sandwich chain, said: "We've definitely had to stock our tills differently. It's been very confusing," he said.

A spokesman for the Royal Mint said that there were no more coins in circulation since the VAT change, but said they were "keeping an eye on the situation".

To read the complete article, see:

(www.telegraph.co.uk/finance/financetopics/financialcrisis
/4337894/Coin-glut-following-VAT-change-damaging-our-pockets-say-dry-cleaners.html)



Wayne Homren, Editor

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