Say “No” to VAT rise
Tuesday 22 June 2010
Amanda Mealing, actress and Save the Children ambassador, explains why a raise in VAT will hit the poorest families (and children) in the UK the hardest.
Listen to Save the Children’s response the Emergency Budget announcement.
As a Save the Children ambassador, I’ve been to help the poorest kids in Sierra Leone and Bangladesh. But I also believe that now we need to help poor kids right here in the UK. That’s why I’m telling the Chancellor today: Don’t raise VAT to 20%.
VAT costs everyone the same – whether you earn £10,000 or £100,000. In fact, the less you earn, the worse it is. If you’re a millionaire, then £50 VAT on a £300 washing machine won’t mean much. But if you’re Dianne, a single mum of four who lives in an estate just round the corner from Downing Street, it’s a fortune.
Insurance on such a thing is an extra cost that is too much to bear, so if hers breaks down she has to buy a new one – and she just doesn’t have the money. Dianne’s typical of many mums Save the Children works with – and whom the Emergency Budget could end up hurting most.
When David Cameron first stood outside Number Ten last month, he said the government would always look after the most vulnerable.
Of course the government has to deal with the national debt. But the PM must ensure the poorest don’t end up paying the price for the mess we’re in.
British children today should not be living in homes where their parents have to choose between heating the house or cooking a hot meal. Or going to school without a warm coat in winter. Or sleeping on the floor because there’s no money for beds. Save the Children is helping families like these every day.
Here are the facts: Raising VAT from 17.5% to 20% would mean an extra £12 a year on telephone bills, an extra £20 a year on clothes, an extra £5-6 on essential kitchen appliances. The sums might not seem much put like that but together it all adds up. For people on a tight budget, it’s the difference between surviving, and getting into debt.
In fact, if VAT goes up to 20%, the poorest could be spending up to £1,600 of their money each year on VAT alone. If Cameron’s serious about protecting the poorest – then he must think for a moment. Otherwise families like Dianne’s – on the lowest incomes – will end up paying the biggest price.
Read our response to the Chancellor’s first emergency budget
Read more about child poverty in the UK
Take action to end child poverty
Tags: campaign to end child poverty, child poverty, cost of child poverty
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June 23rd, 2010 at 11:10 AM
You say: Raising VAT from 17.5% to 20% would mean an extra £12 a year on telephone bills. This work out £480 of telephone bill a year.
My family of 3 spent a total of £320 last year on phone bill.
You say: if VAT goes up to 20%, the poorest could be spending up to £1,600 of their money each year on VAT alone. This work out £10000 spending. It is a lot, I don’t consider this as a poor family.
You need to be realistic. The figure you quote are based on reasonable well off families – from welface paid out, I mean.
June 23rd, 2010 at 11:16 AM
Further to my last comment
You say: Poor families currently spend more of their disposable income on VAT than richer families with the poorest 10% spending 14% versus 5% for the richest
This means that all the incomes (every last £) from the poor families will go to buy stuff which is VATable. I believe that there are a lot of thing such as food, vetegable, are not VATed. If 25% of income are spent on these items, you will spend 10% of your income on VAT. If 50% of what you spend is on non-VAT items, (as what I did last week), you will atmost spend 5% of your income on VAT. As simple as this. You need to live within your mean.
June 24th, 2010 at 12:03 PM
“In fact, if VAT goes up to 20%, the poorest could be spending up to £1,600 of their money each year on VAT alone.”
This cannot be correct. To pay £1,600 in VAT you would need to spend £9,600 – or £185 per week – on goods with a VAT rate of 20%.
Given that housing and food are zero rated for VAT and VAT on domestic fuel is only at 5%, how many of the poorest have anything like £185 to spend per week after paying for these items and Council Tax? If they have this much left over, I’d say they weren’t poor.
July 1st, 2010 at 10:48 AM
Thanks for all your comments. The figures we use are based on official Office for National Statistics data. The data is equalised so it does take into account larger families living on low incomes as well as smaller families. Of course, not all low income families will face such a high VAT bill, but the ONS data suggests that the yearly VAT bill will, on average, be considerably high for the bottom 10% and bottom 20% of households with children.
What is clear from the ONS data is just how unfair VAT is. Whether you look at the bottom 10% or 20% of households, the proportion of income spent on VAT households versus richer households is higher.