VAT Increase and Impact on Consumers' Consumption Habit
Fazluz ZAMAN2015, Asian Journal of Finance and Accounting
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Abstract
The UK government has put new economic policy to increase the Value added tax (VAT) to 20%, which raise widely discussions. This case study aims to find out how increased standard VAT influence customer's satisfaction and consumption habit in North Wales area. There has been lively debate between the government and the opposition party, the government has asserted that it is progressive, as those with higher incomes spend more and will therefore pay more VAT. Opposition claims, however, that as low earners have to spend a much bigger share of their income than high earners in order to meet their basic needs. A total of 80 respondents participated in the survey. sReliability test analysis was used to analyse the reliability of each questions in the questionnaire. Data collected were analysed by using correlation analysis and t-test to determine the relationship between variables and test the hypothesis. The findings reveal that VAT increase has significant impact on consumers' consumption habit. This case study could fill the gap in the literature for consumers'
Key takeaways
- According to Statement of Standard Accounting Practice (SSAP, 1993) which states that "VAT is a tax on the supply of goods and services which is eventually borne by the final consumer but collected at each stages of the production and distribution chain".
- H 2 : VAT increase has significant influence on change in consumers' purchasing power.
- Then, this survey question can be reliable to examine VAT increase and change in consumers' consumption habit.
- This study also found positive correlation between VAT increase and change in consumers' life style, annual income and customers' buying behaviour, age and customers' buying behaviour.
- Consumers' shopping intentions Attitude 8-10 H 1 : VAT increase has significant influence on change in consumers' life style.
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