'Too far and too fast' VAT rise set to cost families £520 a year
 

'Too far and too fast' VAT rise set to cost families £520 a year

01-03-2011 05:57 AM

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Mon, 2011-01-03 13:56


'Too far and too fast' VAT rise set to cost families £520 a year


'Too far and too fast' VAT rise set to cost families £520 a year

Source: The Daily Mail

Families face a £520-a-year tax grab with the rise of VAT to 20 per cent from midnight tonight.
And today Labour leader Ed Miliband will go on the attack in a bid to grab votes ahead of the Oldham and Saddleworth by-election claiming the tax hike is 'too far and too fast'.
The increase in the sales tax could not come at a worse time for a nation suffering the biggest squeeze on living standards for almost 30 years.
It will put around 3p on a litre of petrol, 6p on a pint of lager, £10 on a man’s suit, £80 on a sofa set and more than £300 on a new car.
'Today we start to see the Tory-led agenda move from Downing Street to your street,' Mr Miliband will warn.
'At midnight VAT goes up, hitting people's living standards, small businesses and jobs.
'The VAT rise is the most visible example of what we mean when we say the Government is going too far and too fast, because it's clear that it will slow growth and hit jobs.'
Questioning the timing of the increase, Mr Miliband will say people already feel squeezed with petrol prices at more than £1.20 a litre and high inflation levels that are forecast to outstrip earnings.
'So when family budgets are already squeezed now is not the time for a VAT rise to make it even harder to make ends meet,' he will say.
'It's no wonder experts say it will cost thousands of jobs. And slower growth means making it harder to get the deficit down.'
Electrical goods, phone bills, restaurant meals and holidays will also be more expensive after the 2.5 percentage point rise from 17.5 per cent.
VAT does not apply to most food, but is added to chocolate bars, fizzy drinks and household essentials such as washing detergents, pet food, shampoo, soap and beauty products.
Some retailers, particularly supermarkets, began pushing up prices to reflect the higher rate of VAT just before Christmas.
And until February 1, stores are being allowed by the Government to apply the 20 per cent rate by marking up the price paid at the till, rather than on shelf labels.
It means shoppers will not know the true cost of items until they go through the checkout, raising the prospect of disputes and queues as they come to terms with being asked to pay more.
The frustration will fuel public anger over a rise that was not included in
the election manifestos of either the Conservatives or the Lib Dems and which comes after many households have been hit by small or non-existent pay rises.
The increase is also bad news for retailers whose sales in the run-up to Christmas were devastated by the extreme weather.
Shoppers could be driven away from making major purchases with the result that retail sales may be down by as much as £2.2billion in the first three months of 2011, according to a report from shopping comparison website Kelkoo and the Centre for Retail Research.
Such is the concern that the British Fashion Council made a last-ditch plea for the rise to be delayed for 30 days to ensure those who were unable to shop before the January 4 deadline are not penalised.
The TaxPayers Alliance complained that the increase will hit poor families hardest and called for it to be cancelled. However, Chancellor George Osborne has made clear that it will be a permanent fixture of government tax policy.
Price comparison website uSwitch.com said the VAT rise will add £158 a year to essential bills alone, particularly petrol, food and phone bills.
Spokesman Ann Robinson said: ‘Every household will be affected in one way or another. Cutting back on luxuries is old news – now people need to cut their essentials.’






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