Happy New Year?

As we all brace ourselves for the VAT rise on the 4th January the real implications of that 2.5% increase in tax is becoming evident.

Research released today shows that it will leave the average family with £225 less disposable income every year. Earlier this year it was estimated to add an extra £33 to all our annual shopping bills. Thousands of the everyday items we buy are going to become more expensive overnight and a report for data management firm Acxiom says it will affect many households ‘harder than they expect’.

It has also become clear that there are some curious discrepancies in the items that are liable for VAT. If you want to avoid paying extra take a look at Her Majesty’s Revenue and Customs website. Small changes in the items we buy might save us money. HMRC tells us that whilst partly chocolate coated biscuits are subject to VAT, chocolate chip biscuits are not. Potato crisps are liable for VAT whilst corn chips are not. A gingerbread man decorated with two chocolate eyes is exempt from VAT, but if it contains any more chocolate standard-rated VAT is charged.

But it isn’t just ordinary families across the land that are facing more pressure on their budgets. This VAT increase will hit our public services hard. Just this week Plaid released figures showing that it would cost the NHS in Wales over £20m extra every year. £13.2m extra on revenue allocations whilst the impact on the current NHS capital programme would be at least £7.7m in a full year. (These figures don’t include Velindre NHS Trust so the total is even higher in reality).

Here in the north of Wales our Betsi Cadwaladr University Health Board has to find £2m to cover the impact of the VAT rise on revenue costs alone. And it isn’t just health. Other public bodies across the north will have to take a huge chunk of their tight budgets away from essential services to cover Westminster’s VAT rise.

Raising VAT is wrong. It’s another example of a Tory/Lib Dem policy hitting the poorest in our society the hardest.

So if you want to give Cameron, Clegg and the taxman a poke in the eye why not swap your VAT liable salted nuts without shells for some VAT exempt salted nuts supplied in shells. Very appropriate given that this policy truly is nuts!
This tax rise is indiscriminate and unjust. It will clearly hit the poorest consumers hardest, as people who earn least already spend proportionately more of their income on VAT.This tax rise is indiscriminate and unjust. It will clearly hit the poorest consumers hardest, as people who earn least already spend proportionately more of their income on VAT.

Llyr