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This will push up the cost of haulage, which will push up the price of goods in the shops, which in turn will push up inflation, which in turn will place further pressure on the Bank of England to raise interest rates to control inflation.
A rise in interest rates will force up the price of loans and mortgages, which in turn will force up the number of home repossessions, as people already struggling to pay their mortgages because of the recession will just buckle under the strain.
How does the government expect poorer families to cope with this rise in VAT? Poorer families spend virtually all their income on just living, week to week, hand to mouth against better off people, who only spend a proportion of their income on actually living, this is why rising VAT is a regressive tax which will hit the poor hardest.
Remember when David Cameron said that he had no plans to make deep cuts and he would do nothing to widen the gap between rich and poor?
He is a Liar, Liar.
The Institute For Fiscal Studies has said that as a direct result of Chancellor George Osborne's austerity measures, 200.000 more children would be condemned to poverty and 800.000 more adults.
1 comment:
I am not sure if I entirely agree. VAT is a tax on spending and not on income, so is to some extent avoidable. Remember too that (most) food, rents, mortgages, newspapers, books, children's clothes and public transport are all zero-rated. That would cover a high proportion of what poorer families spend. The VAT on domestic fuel will remain at 5% and is not increasing. The increase in road fuel duty and VAT rise is a pain of course, but will help in the long-term aim towards reducing our dependency on fossil fuel and carbon emissions. And before you ask, I am living on JSA and supporting a family of six - with some difficulty - so I think I do understand what it means to be poor. I just don't understand the kneejerk reaction against VAT, which seems to me to be fair provided essential goods and services are either exempt or zero-rated (or in the case of domestic fuel attract a 5% rate).
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