VAT down, but prices up at Amazon

 

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By Barry Collins

Posted on 1 Dec 2008 at 11:20

The VAT cut may have come into effect today, but customers won't be feeling the benefit on selected items at stores such as Amazon and Apple's iTunes.

Last week, leading retailers including Amazon pledged to pass on the drop in the VAT rate to customers.

PC Pro took note of the prices at several leading retailers to see if the VAT cut would actually be passed on to customers.

Last week, for example, the Acer Aspire 5920 laptop was £369.99 including VAT at Amazon. Today, the price remains identical, despite the Aspire 5920 product page now bearing a message proclaiming: "All listed prices on applicable products sold by Amazon.co.uk include the new, reduced VAT rate of 15%. This has been applied automatically to the price of your item so you don't need to do a thing."

The VAT is being applied at the new 15% rate at the Amazon checkout, which means the retailer must have raised the ex-VAT price to compensate.

Other Amazon items tracked by PC Pro have gone up in price. A Belkin iPod Tune FM 3 was £14.99 last week, but is £21.87 today. Amazon claims that the Belkin product was on a price promotion that ended on Sunday night.

An Amazon spokesman denied the company is cashing in on the VAT cut. "There are a number of factors that go into making a price, including supplier costs," he told us. "Just because VAT goes down, it doesn't mean prices go down."

However, he insisted the company was cutting prices. "If you look across the site, there are hundreds of thousands of items with lower prices," he insisted.

iTunes unaffected

Elsewhere, the Apple iTunes store is carrying on regardless. Individual tracks are still priced at 79p, whilst albums such as Guns N' Roses Chinese Democracy remain at £7.99 - the same as it was at launch.

That's because Apple's iTunes store is hosted out of Luxembourg, which hasn't reduced its VAT rates. Apple's hardware prices do reflect the new VAT rate, however.

Adobe hosts its download store out of the Republic of Ireland, which the company has used as an excuse for charging more for downloads than boxed products in the past. However, this morning, it was still charging the full 17.5% on boxed software, with Photoshop Elements 7 listed as £55 ex VAT, and £64.52 inc VAT.

Adobe was unavailable for comment at the time of publication.