28 January 2004

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VAT increase has not hurt consumer spending, Farrugia says

By Kurt Sansone
The three per cent VAT increase does not seem to have had any impact on consumer spending, GRTU Director General Vince Farrugia said yesterday.
Asked whether the GRTU was going to live up to its post-budget promise to protest against the VAT hike, Mr Farrugia insisted that any negative impact would be calculated by the spending patterns of consumers.
"Shop owners passed on the VAT increase to consumers and as yet there hasn’t been the reaction against VAT that we were predicting. If there are circumstances that indicate people are not buying as a result of the three per cent increase then the GRTU will be taking the issue to another level," Mr Farrugia said.
Mr Farrugia was speaking to journalists at the end of a meeting held at Castille between the Prime minister and the social partners.
In the November budget Finance Minister John Dalli announced a three per cent increase on the basic VAT rate, which is now levied at 18 per cent. Food and medicine remain zero-rated while restaurants and hotel accommodation are charged at five per cent VAT.

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