Wednesday, September 14, 2011

VAT increase to cost families £450! Did I hear that right?

I am just watching BBC's Newsnight. Ed Balls has just said that the VAT rise from 17.5% to 20% will cost the squeezed middle £450. Did he really say that as a sound bite?

The thing is, that if you work it out, to get taxed £450 more by the VAT increase you would have to spend £18,000 on VATable goods that are taxed at the full rate. That excludes most food, vegetable plants and seeds, books, children's clothes, rent, mortgage and of course newspapers.

So who spends £18,000 on luxury items a year who is in the squeezed middle?

1 comment:

James Burdett said...

Classic Balls/Brown trick this. Which is to say something that is possibly true (in this instance I don't know) but in a way that is misleading. I imagine Balls is using figures in a suspect way (quelle surprise), it would be plausible that after the VAT rise people's average liability would be £450 equating to £2250 of spending and the increased liability is £56.25 a year or about £.10 a week. However by presenting it in the way he does he makes it sound as if everyone will be paying an additional £450 a year. Deeply cynical but then that is the MO of Balls and his mentor.