Archive for January, 2011

VAT is the problem?

January 13, 2011

With thanks to my esteemed colleague, VAT expert John Voyez, for his insight. Any errors or omissions are entirely mine!

Well, what a lot of rubbish has been written in the press in the last week or two about the increased VAT rate – never let accuracy get in the way of a good headline !

Just for the record, there is no VAT on most children’s clothing, no VAT on most basic food items, no VAT on train, bus and airplane fares, no VAT on books, newspapers and magazines, no VAT on residential housing construction, no VAT on most drugs and medicines, no VAT on betting and gaming, no VAT on education, no VAT on insurance or financial services, no VAT on ordinary postal services, no VAT on most sport activities, no VAT on entry to museums, no increase in VAT on a range of items including children’s car seats, domestic fuel, contraceptives, energy saving equipment, products that help you stop smoking, and, finally, no VAT on cremation or burial (unlike other taxes, death is still VAT free) !

So post 4th January, it will not cost you a penny more at the weekend to slap on an anti- smoking patch, jump on the bus to go to Sainsbury’s where you can buy some clothes for the kids, and at the same time buy most of the weekly shop, including a copy of Sporting Life, before picking up some aspirin to ward of the headache for when you drop in at the bookies on the way home and lose your savings (accrued VAT free) on the 2:30 at Epsom, followed on Sunday by a game of football at the local sports centre in the morning, and a trip to the museum (because you feel you should at least do one thing educational at the weekend), before finally falling asleep in your newly built Wimpey home in front of your brand new 90″ plasma 3D HD TV screen you have just bought, which unfortunately did cost you 2.5% more in VAT.

And, just for the record, if you are still feeling hard done by, most of our EU counterparts have for many years been paying VAT at 20%, and in some cases at a rate well in excess of 20%!

So VAT, exactly, is the problem?