Monday 22 November 2010


"No Sire, I promise, there will be no increase on Duchy Originals. No one could possibly consider them a luxury unless they were a registered sadist." Prince Chick enjoys a cup of tea, while wee Osborne is only allowed a glass of water and the guy at the back stifles a yawn.

So from January 4, VAT is set to rise from 17.5% to 20%. It will push up prices of a wide range of goods and services.

There are some things which are VAT exempt such as most food items, books, newspapers, magazines and children’s clothes.

But the increase will apply to items which the government considers to be luxuries; for example chocolates, ice cream, biscuits, etc.

Of course, when the last government reduced VAT in order to try to stimulate the economy by reducing prices, we all laughed at them. It was, we said, a matter of a few pence here and a few pence there. A t-shirt from Primark came down 6p; one from Next by 15p. A pair of shoes was maybe 40p cheaper. Even on big items the price difference was small enough not to make a huge difference. If you were going to spend £1000 on a tv, the saving was only around £20. Not much on that level of expenditure. It certainly wasn’t going to persuade you that, yes, after all you could afford it.

It’s the same kind of rise. A few pence here and there added to the price of ordinary items and even with big items, it’s not an earth shattering amount. Even a car which was priced at £15,000 will now have a price tag of £15,300.

However, in as much as the last government maintained (and was backed by figures) that the VAT reduction stimulated the economy, the VAT reduction will serve the opposite purpose.

The government reckons that the move will bring in around £13 billion... and that’s money that will now not be used to purchase other goods, keeping other stores and businesses alive. Another downer is that there will be an upward effect on inflation.

Of course if you go to France you’ll find VAT is already around the same percentage at 19.5% and in Germany it is at 19%. In some of the more prosperous countries of the Union VAT is far higher. However, it should be remembered that in different countries, different levels of other taxes may make up for this for example income tax starting at a far higher level or charged at a smaller percentage.

One question I have always wished to know the answer to is: there are items here which are exempt for the tax: essential foods and children’s clothes I can understand. What I do not understand is why books, newspapers, and magazines are VAT free.

It’s not that Mr Murdoch wouldn’t like it, is it?


  1. Caption comp:

    Big ears lets one go.

    Rates of VAT on different goods and services

    Job creation make things difficult as its good for the economy.

  2. cynical..

    That VAT link is an eye opener. No VAT on gambling but elderly mobility aids and sanitary towels at 5%.
    Cars and spare parts for cars at 17.5%.
    So if a lady wants to stay clean then the govt will tax her.
    If you want to repair your car they will tax you. If you don't repair the car and drive with no MOT or worn tyres than they will fine you. Nice.

  3. Montague

    New Element Discovered

    Bear in mind that some of the neutrons have decayed over time.

  4. The mysteries of VAT. Aye Tris, the books etc always seemed strange. I think, when VAT came in, that universities and schools created a stooshie about VAT on books, hence the zero.

  5. cynical..

    ha ha. I think that particular element has actually been around too long. Might be an ex element in Ireland soon though.

  6. That's a good idea Cynical... Caption competition....

    Interesting VAT info! Thanks

  7. yea, but monty, if you bet on whether they will catch you without your MOT, the VAT will be 0% rated.

    What a lovely government.

  8. This must be the most dense element. It should really be kept like phospherous, under water, preferable in a deep cravasse at the bottom of a very deep ocean... underneath the pack ice to the north of Greenland.

  9. SR: I could see that some books might be thought to be educational, but magazines? Like the ones at the supermarket checkouts: "Chat" or "True" or stuff like that... with headlines like "Jordan can't live without Pete"; "Cheryl's complete breakdown... fan said her bum looked big"

    They're not only NOT educational, but positively anti-educational.

    Why they don't have VAT on these things is beyond me. They could make an exception for library and text books.

    I'd love to see another nail in Rupert Murdoch's empire with his prices going up by 20%.

  10. I think, Monty, seeing as the Irish have lost their government, we should, in all conscience (because they are our nearest neighbour, and dear friends and Mr Osborne is deeply concerned for them) offer them that London of charge as they are broke.

    I'd be perfectly happy to manage only with the Edinburgh government from now on.

    Oh, we could throw (and I mean that literally) in the House of Peers for free... and if we can't throw quite as far as Dublin, and the whole lot goes in the drink.... well, these things happen.

  11. All I will say is that the VAT exceptions are not being removed - so the argument that the increase will dispraportionately inpact on the pioor ids aexaggerated!


    George Osborne, Il Duce :D [I joke, but my exceptionalism point remains, deep, devout and unshakeable - esp since Osborne is the most attractive member ... ] ... carry on matron ... :D

  12. I am drunk, I quit till tomorrow - then I shall justify thiss rambling - HERE IS TO PRESIDENT BARROSSO!

    ... good night, and God bless :)

  13. Tris

    I think the bit that is being forgotten here is that VAT is a very unfair tax.

    If you need a an aspirin you pay vat at the full rate. If you are working with a decent wage the VAT element is tiny, but if you are a pensioner on a fixed income the VAT element is much bigger.

    VAT should be 5% with the difference in income for HMRC made up by income tax being fairer, with the higher rates taxed higher, say anything over £100.000 per year taxed at 60%.

  14. Dubs: Yes, it is an unfair tax. One of Mrs Thatcher's earlier moves was to double it and then some more, and cut income tax.

    Whilst of course she did reduce tax on ordinary mortals, she only reduced it by 2p in the pound. She halved the rate for the rich.

    That meant that the slack on taxes was taken up by the poorer people.

    Still, she didn't put it on bread, or indeed cake so the poor could always eat cake!


  15. LOL Dean... you don't have to justify it.

    You're a student. You were drunk.

    You might have had to justify it if you were not!

    I'm just flattered that you come home from a night on the beer and look at Munguin's Republic.

    I expect you need some of these aspirins that Dubbieside was talking about right now.

    I bet the head hurts!


  16. Tris

    The vile stinking two faced Tory scum will be singing in the bath(whilst washing their Tiny Todger)

    Inflate away that dept in the bad old politics way
    as they said they wouldnt.........

  17. What Niko, will they all be in the one bath?

    I've heard they were a bit kinky but wow.

    I bet there's a fight going on as to who can get farthest away from Theresa May... after all Theresa may, or she may not...