I said after the budget statement on Monday that the very people, dismissing the 2.5 % cut in VAT as no help to the poorest, would be the ones who would shout the loudest if it were raised. Barely 24 hours later the media discovered that raising VAT above the 17.5% after the 13 months at 15% was ONE of the measures discussed BUT REJECTED. Out came the usual mob baying that it would hit the poorest people. Funny that!

I worked out a more optomistic view of the cut is that it lowers the total VAT element of the price by just over 14% or 1/7th, if you prefer fractions 🙂 .

I found an old Lidl till receipt and they itemise the products which attract VAT and it reminded me that zero rating only applies to relatively few groups of products in everyday use and I had forgotten that it was on things like toiletries, sweets, freezer bags, loo paper, sanitary wear and cleaning materials. All things which we buy every week and, although only pennies are saved on each item, over 13 months it will all add upto a useful sum – especially when added to the larger household bills from telephone companies, tradesmen and car maintenance.

When it is claimed that only income tax reductions help the poorest they are wrong. Many of the poorest are pensioners who, thanks to the increased tax free allowances, have income below the taxfree allowance and thus would not benefit from reducing the rates of tax, but will benefit from the VAT reductions and the increase in the fuel allowance.

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