Game Retailers Forced to Swallow UK Tax Hike

[Logan Westbrook]

Game Retailers Forced to Swallow UK Tax Hike

An upcoming increase in sales tax in the UK will not be passed on to gamers, say major retailers.

UK game retailers are going to see their profits drop in January, as they bear the brunt of an increase in VAT. Senior figures in UK retail say that they are reluctant to increase prices past the normal £39.99 price point for fear of driving customers away.

The 2.5% increase, which takes the rate of VAT to 20%, was announced as part of the emergency budget outlined by new chancellor George Osborne last week, and Kim Bayley, director general of the Entertainment Retailers Association, believes it could be disastrous for retailers going forward.

"This is a big increase which is bound to have an impact on retail," she said. "Government action often produces unintended consequences and if the result of this rise was to lead to more closures and interfere with the ecology of entertainment retailing, no one should be surprised if there is an outcry."

It seems likely that this tax increase, and the corresponding loss of profits will result in an even greater focus on pre-owned game sales. Pre-owned sales were already more profitable for retailers than new games, and with margins getting even smaller, emphasizing this part of their business seems inevitable.

Source: MCV [http://www.mcvuk.com/news/39833/Retail-forced-to-swallow-VAT-hike]


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[Delusibeta]

I calculate that had retailers passed the VAT increase on, your £39.99 game would cost a grand total of about 84p more (an increase of 2.1%). So, it's really rather small beer.

 

[sephiroth1991]

It won't stop me from buying and renting games.

 

[SonicWaffle]

I calculate that had retailers passed the VAT increase on, your £39.99 game would cost a grand total of about 84p more (an increase of 2.1%). So, it's really rather small beer.

Yeah, but this is good publicity. Few people are happy enough to hear that they'll save money without even thinking about how much they'll save. Hence the prices for everything ending in 9; the brain looks at 99 and tells you "Hey! 99p is less than £1! Bargain!"

 

[Outlaw Torn]

I already wait for games to drop in price before buying them. Most of the blockbuster titles will go over £40, but after a few weeks they tend to get a fair bit cheaper. It's cheaper than preordering and not as evil as buying preowned. Since the retailers already make a metric fuck-load of money they aren't suddenly going to go out of business because of this. They'll just find another way to leach money out of customers.

 

[lee1287]

I liked labour more =[

 

[Woodsey]

I calculate that had retailers passed the VAT increase on, your £39.99 game would cost a grand total of about 84p more (an increase of 2.1%). So, it's really rather small beer.

Exactly - such a big fuss was made a couple of years ago when they dropped VAT to 15% and it doesn't make the blindest bit of difference on most regular products.

 

[Cabisco]

I liked labour more =[

I for one, did not.

Labour would still have made this increase in VAT, whoever got into power had to.

 

[QueenWren]

I already wait for games to drop in price before buying them. Most of the blockbuster titles will go over £40, but after a few weeks they tend to get a fair bit cheaper. It's cheaper than preordering and not as evil as buying preowned. Since the retailers already make a metric fuck-load of money they aren't suddenly going to go out of business because of this. They'll just find another way to leach money out of customers.

Exactly, I always buy after the 6 week window. For big games that normally drops them to £30 for online (and for smaller games some times as low as £15) but you do have to wait a lot longer for prices to drop on the high street.

 

[ultimateownage]

FYI government: YOU CAN'T FIX THE FINANCIAL CRISIS JUST BY TAKING MORE MONEY AWAY FROM YOUR CITIZENS! [sub]Stupid shits.[/sub]

 

[rembrandtqeinstein]

I use the XKCD strategy for game buying:

 

[The Random One]

A bit of a misleading headline... it looks like the government is forcing them to not raise the price. That would be weird. But, just as bad. I still think increasing sales taxes is better than increasing income taxes.

FYI government: YOU CAN'T FIX THE FINANCIAL CRISIS JUST BY TAKING MORE MONEY AWAY FROM YOUR CITIZENS! [sub]Stupid shits.[/sub]

...well, it helps.

 

[Gasaraki]

Reminds me of what's going on over here in Canada with the HAT (Short for Harmonized Sales Tax, nothing to do with hats)

 

[Xanias]

FYI government: YOU CAN'T FIX THE FINANCIAL CRISIS JUST BY TAKING MORE MONEY AWAY FROM YOUR CITIZENS! [sub]Stupid shits.[/sub]

Errrm, sorry to tell you this, but it may well have an effect on inflation, y'know (or perhaps not), the whole 4 economic priorities of low inflation, high growth, low unemployment and a good balance of payments? No?

Well, as inflation has been climbing exorbitantly with the comparatively paltry growth recently, the government are thinking up ways to stem the flow, so perhaps they are anticipating that there will be sufficient growth to handle a small price hitch by next year.

On the other hand, it's not really such a huge amount that it will have any recognizable effect on inflation, just as the drop to 15% VAT last year had relatively little effect on growth, I expect it may be to help with the inevitable downsizing of the public sector ('tory government and what not)- specifically to help re-reimburse state sector employees that shall be made redundant.

It's a little pithy to say that 84p is worth a full on all-caps rant though, don't you think?

 

[RejjeN]

FYI government: YOU CAN'T FIX THE FINANCIAL CRISIS JUST BY TAKING MORE MONEY AWAY FROM YOUR CITIZENS! [sub]Stupid shits.[/sub]

Actually... The common way to balance a countries economy is by either giving out more money (lower taxes, etc) or by taking away more money (higher taxes, etc). Doesn't ALWAYS work but it's how things work over here in Sweden and our economy is pretty strong now considering the crisis we went through in the 90's.
Edit: Well it appears I have been ninja'd, good show.

 

[UnravThreads]

I calculate that had retailers passed the VAT increase on, your £39.99 game would cost a grand total of about 84p more (an increase of 2.1%). So, it's really rather small beer.

Yeah, but this is good publicity. Few people are happy enough to hear that they'll save money without even thinking about how much they'll save. Hence the prices for everything ending in 9; the brain looks at 99 and tells you "Hey! 99p is less than £1! Bargain!"

Indeed. I doubt anywhere will truly hike the prices up and just "swallow" it, not just GAME/Gamestation/Gameplay. I doubt the price of cheese savouries in Tesco will increase, nor the price of a bag of Arse Flavoured Nom Noms from Lidl.

Great time to do some PR though, make it look like you're "doing good for your customers" and all that.

 

[Albino Boo]

Yeah a tax on sales goes up by 2.5% but a tax on profits goes down by 1% each year for the next 3 years. So they are not doing that badly

 

[ultimateownage]

FYI government: YOU CAN'T FIX THE FINANCIAL CRISIS JUST BY TAKING MORE MONEY AWAY FROM YOUR CITIZENS! [sub]Stupid shits.[/sub]

Errrm, sorry to tell you this, but it may well have an effect on inflation, y'know (or perhaps not), the whole 4 economic priorities of low inflation, high growth, low unemployment and a good balance of payments? No?

Well, as inflation has been climbing exorbitantly with the comparatively paltry growth recently, the government are thinking up ways to stem the flow, so perhaps they are anticipating that there will be sufficient growth to handle a small price hitch by next year.

On the other hand, it's not really such a huge amount that it will have any recognizable effect on inflation, just as the drop to 15% VAT last year had relatively little effect on growth, I expect it may be to help with the inevitable downsizing of the public sector ('tory government and what not)- specifically to help re-reimburse state sector employees that shall be made redundant.

It's a little pithy to say that 84p is worth a full on all-caps rant though, don't you think?

Wow, nice first post. Let me be the first to welcome you to the escapist. Please enjoy your stay, and don't go into the basement.

Now that's over with, yes doing so can help the economy, but that's all I've seen them try to do lately.

 

[corporate_gamer]

wait, isn't this VAT rise effecting every retailer selling pretty much everything except for childrens clothes which are exempt.