Views on reducing VAT on repairing white goods

[rich345]

Hi, I am interested in the environmental impact of short-lived white goods.

I would appreciate the views of repair engineers about the idea of reducing to zero the VAT on repairing goods. They have done something like this in Sweden so it must be possible:

https://www.theguardian.com/world/2016/sep/19/waste-not-want-not-sweden-tax-breaks-repairs

It would make it more affordable for customers to repair their goods rather than throw away. But what might the unforeseen consequences be?

And what about making it compulsory to offer a 5-10 year guarantee on large white goods?

Which policy do you think is better and more achievable? Or should we be asking for both?

Thanks for any views.

[electrofix]

Re: Views on reducing VAT on repairing white goods

5-10 year warranty would just mean all repairs would go through agents who want to pay low rates

no VAT on repairs would that mean cheaper repairs. I am not vat registered would make no difference to me. Also if zero vat included spares then I would be unable to claim the vat paid to my supplier back unless they were allowed not to charge it

bit of a mine field

Dave

[rich345]

Re: Views on reducing VAT on repairing white goods

Thanks for replying Dave.

On the VAT issue I imagine quite a lot of repair businesses are VAT registered so at least for their repairs it would reduce the cost of repair and make it more likely customers would choose to repair rather than junk it and buy new. But is this just encouraging manufacturers to produce machines which need repairing? Would the longer warranty period be a more effective way to reduce waste, because manufacturers would have to build better machines? I’m not sure what the answer is to your point about getting paid a decent amount from the agents/manufacturers but do you think that might be a separate issue?…

[electrofix]

Re: Views on reducing VAT on repairing white goods

if the manufacturer extended the warranty they would pay an insurance co to take on the risk. these companies want the agents to take on repairs on a fixed cost basis so you get the same amount for a motor fault or a complete drum change. Also they either supply the spares or only allow a small mark up
when I do a job I make profit in 2 ways first is the labour cost and second is the mark up on spare parts. Which means I can make a lot more on private jobs. If all jobs were under a policy it would take away a lot of the private work and from my point of view it would not be worth while

Dave

[Martin]

Re: Views on reducing VAT on repairing white goods

Scrapping VAT on repairs will have no effect whatsoever toward the viability of repairs over replacement. Labour costs alone have exceeded the practicality of repairing appliances. Coupled with the rising cost of manufacturing, distribution and storage of spare parts, making repairs uneconomical from the outset.

If VAT was ever scrapped or reduced on white goods then other service industries would demand the same. The government’s coffers would need immediate recompense and general taxes would rise as a direct consequence.

Consumerism rules, cheap goods abound, demand for more continues apace.

[kwatt]

Re: Views on reducing VAT on repairing white goods

In many ways, Martin is correct, certainly the conclusion drawn in that, the consumer is driving this, not manufacturers, repairers or government.

People want ever cheaper and cheaper, expect better performance and expect the products to last and be repairable. And I’m really sorry but the reality is that you can’t have it all, you get cheaper or you get better… both, no.

If you get better then you should in turn see more effort of durability etc and, to be blunt, people will look after them more as many cheap products are treated with disdain ergo, shortening the life even further. The financial penalty of not doing so isn’t great enough to dissuade people from it.

That all might seem a somewhat jaded view to people outside the repair industry but believe me, it is true.

Losing VAT on repairs, as Dave noted, will do huge insurers like Domestic & General et all and large retailers that repair like Currys a favour perhaps but industry wide, it wouldn’t make much difference. You could argue I suppose that the hoopla around it would maybe make people look more to repair than replace but I doubt it.

Taking the VAT element of parts would probably make a difference but how much and whether that would balance out I can’t say for sure.

But people’s brains work in strange ways at times as more often than not the conclusion reached is that the “controller” or “brain” has failed, regardless of the fault and it’s going to cost over £100 to fix it. Even when we know that is not the case, many repairs are way, way less and not as major.

Why do that when you can have a new one delivered tomorrow with a fresh warranty for less than £200?

So many don’t even bother to ask, they just click on that “Buy Now” button as the majority can afford to do so.

I doubt the removal of VAT would make any impact there.

K.

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