VAT Increase and Impact on Consumers’ Consumption Habit

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.  Reliability 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’ consumption habit on VAT increase. Also the outcomes of this study could add to existing literature and serve as a foundation for further studies.