How to survive VAT increases

It is increasingly important to be informed and skilled about finances and economics. This attitude towards personal finance can make a difference between the anxiety and stress of barely making the month financially and leading a financially healthy lifestyle. There are so many habits we can adopt and skills we can learn to safely survive these financially turbulent times without falling into financial traps that lead to bankrupcy or being black listed. One of these simple methods is analysing and applying methods to beat taxes. Many countries, especially in Europe will and have already applied tax hikes. The examples are Spain which has recently raised value added tax to 18% from 16% while England will follow next year, jumping to 20% from 17.5% in January 2011.The tax increments will affect tourists and people who live in these countries in various ways. Therefore the knowledge of how to survive these tax hikes will mean money in the pocket for many. This article will treat the subject of tax from the point of view of Value Added Tax or VAT in short.

Basically most types of merchandise and services will be affected. This implies cars, food, clothes, household items and more. However, in every country it is important to find out goods which are exempt from tax. These items are usually essential items to ease the financial strain on those most vulnerable and these items are generally food, baby clothes and so on. This will surely modify money habits but most importantly this way of doing things leaves no nasty suprises for the end of the month.

 Knowledge is power: Be an informed shopper.

Like mentioned above, get out of your way to inform yourself of tax exempt goods and services then change your shopping habits accordingly. In fact the line between tax exemption and tax application is so clearly marked that within the category of taxed products one can still find various taxation rates for various products. That is to say, goods generally fall into three value added tax categories: zero rate items for essential items, reduced rate items and those charged at full rate. This information is freely available from government agencies and some financial institutions. It will be a pleasant surprise for many mothers to realise that the food items which carry food taxes are usually classified as luxury items and these in many cases happen to make a big bulk of junk foods. Luxury items are for examples chips/crisps and biscuits while essential food examples are sugar, flour and milk. Again, its important to check in each country, region or state to specifically know about the items there. This website here has information of VAT applications on goods and service in the United Kingdom.

Time is Money: Anticipate sales

VAT increments can also be overcome by bringing sales forward. Please note that this does not necessarily mean buying in bulk. This method can be applied to big purchases like for cars, furniture, appliance or for specific interests like for art collectors as well as for services like holidays, and spas. Be aware of items bought on instalment because unless the merchandiser says so the items will automatically be subject to VAT as soon as it comes into effect, and these will apply to your instalments.

Money is not everything: Swipe your credit card

In order to stimulate buying many businesses offer interest free credit card purchases. Inform yourself of all the fine print and conditions before jumping onto this bandwagon, but it is a good option and can alleviate immediate cash problems as long as the consumer is responsible and has made a budget and plan for repayment. This website here has credit card company comparisons in order to make an informed decision.

Fly & Buy: Duty Free & Overseas Purchases

Travelling is an excellent opportunity to buy cheaply or at a bargain either in the airport or in the city. Basically, the point is to go from one country with high tax to a place of lower tax   and make purchases of items which yield the biggest benefit. This could be called a  tax osmosis. Make sure that the currency is either the same or the currency exchange enables this benefit. As a word of caution it advisable to buy less valuable items which are small and have full guarantees. Remember, this might not be the next holiday destination so items like cellphones or mp3s are less riskier to take across the atlantic or across another geographical demarcation than laptops or flatscreen televisions.