USA: Tesco Implementing VAT Cut Three Days Early to Help Christmas Shoppers

Tesco sign: Tesco is implementing the VAT cut three days early. The temporary 2.5 per cent cut comes into effect officially on Monday. Photo: reuters

The supermarket giant has decided to implement the cut in an effort to help families save on Christmas shopping bills.

The chain said it would pass the VAT reduction announced by Chancellor Alistair Darling on to all applicable non-food products, including electrical goods, home entertainment and clothing, from Friday.

Mr Darling announced on Monday in his pre-Budget report that VAT would be cut by 2 per cent from 17.5 per cent for 13 months. In January 2010 the rate of VAT will revert to 17.5 per cent.

The temporary 2.5 per cent cut comes into effect officially on Monday.

Tesco commercial director Richard Brasher said: "We know that many families will start their Christmas shopping this weekend as pay packets arrive and we don't want customers to miss out on the cut in VAT which comes in on Monday."

A spokesman for DSG international plc, owner of Currys, PC World and Dixons, said they had passed the cut on in full at midnight on Monday, the day of the Pre-Budget Report.

He said: "We felt it was right thing to do, even though it was complicated.

"We also felt that we if did not do it then customers would stay away and we need to help customers, not make it more difficult."

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