A one-year 2.5 per cent reduction in VAT from 17.5 per cent to 15 per cent was announced in the pre-budget report to help get people spending more in the shops.

Tracy Harvey, of Harveys department store, said price tags had not been changed but the discount would be given at the till instead.

She said: "We are passing it on. It's money that belongs to the customer.

"It's not going to make a huge amount of difference but it's money that goes back to the customer.

"People that have been coming in have said it's not going to make much of a difference to how they spend.

"It's just a bit less money that goes to the tax man."

Robert Crabtree, of Harold Crabtree in Halifax, said: "Anything that saves people a few pounds is a good idea.

"It's not a huge amount but as people are buying a lot in the run-up to Christmas it can still be an amount.

"We have got to pass it on. We need to keep the customers at the forefront."

Andrew Greensmith, manager of Bensons for Beds in Horton Street, said: "I think it will inspire customers.

"It will mean more money in the customer's pocket for major purchases like beds or suites.

"It would have been better to bring in tax cuts because customers can see the benefit straight away. It will not make a massive impact but it gives us more of a margin to play with."

Beth Ward, town centre manager, said: "It seems a lot more work for retailers at their busiest time before Christmas, when they want to be concentrating on selling rather than spending time in the back making the changes.

"There needs to be a lot more incentives to get people shopping."

Mohammed Naveed, owner of Shorty's newsagents said: "I don't think it will have a knock-on effect.

"If it was a decrease of 5 per cent it would have had an effect."

He said many small businesses could only calculate round numbers on their systems so the half per cent made things more difficult.

"It just adds costs changing prices and it's time-consuming.

"It makes a difference if it's thousands of pounds but not if it's pennies," he said.

Arthur Fox, owner of Arthur's Shoe Repairs, said he would defer putting prices up to take into account the changes.

Richard Lockyer, owner of the Hi-Fi Centre in King Cross Street, welcomed the changes and said: "However small it appears to some, anything that contributes in these times of economic crisis has got to be a good thing."

A number of small businesses said they would not be passing on the reduction and it would be more beneficial for larger companies.