Thursday, January 20, 2011

A footballer on question time?


Except Clarke Carlisle makes some intelligent and articulate points. Well done!

Wednesday, January 05, 2011

How hard does the VAT increase hit?

Well the short answer is it depends on how much you spend on what.

However I have seen some fascinating rubbish on the issue.

VAT is going up 2 and 1/2 pennies in the pound, but this rate does not apply to food*, rent, mortgages, domestic gas and electricity, children's clothes, books and newspapers. It does apply to petrol, cigarettes and alcohol**, food at restaurants etc.

So how much do you spend on VATable goods a week that will be going up?

To give you some idea, to beat the £1.30 a week extra some are claiming the poorest would have to pay in VAT you would have to be spending £52 a week on goods and services which attract VAT at the full rate. This does not include heating, lighting, food, children's clothes.

Some say it will hit the "average" family by £300 a year. That is paying £5.77 a week extra in VAT or, in terms of spending on VATable goods and services, £231 a week. This is where I really start to scratch my head as I just can see that level of income after I have paid for things like the house, the bills council tax and food all of which is not vatable. In fact if you look at it, that applies to a household income of £23 K (presumably after tax) which equates to a weekly income of £442. Is anyone seriously suggesting that a household with that level of income is blowing well over half of it on VATable goods? That would leave only £211 a week (£915) to pay for the house, council tax, utility bills (excluding telephone which is charged at the full rate) and food. Credible? I don't think so.

That said I would rather tax wasn't going up, but then I would rather not have had 13 years of a Labour government flying the economy into the ground whilst pushing up public sector inflation through the roof.