Happy New Year from the British Government – the V.A.T will increase to 20%!
I know this is what you are all thinking, thank you Mr Osbourne, like I wasn’t struggling enough!
So today is the day when the VAT increase begins and we really start to notice the increase when we go about our daily lives and the morning paper and breakfast on the run, which you buy everyday, is more expensive than it was before the Christmas break. Then you get on the train, and you buy the usual weekly ticket and the conductor announces the price and you look in the wallet and think, ‘I’m going to have to get more cash out for lunch’.
Having my morning coffee this morning Mr Osborne told the BBC Radio 4 Today programme: ‘I think it is a reasonable rate to set, given the very difficult situation we find ourselves in. The VAT rise is a tough but necessary step towards Britain’s economic recovery.
‘If you don’t want to raise VAT, you have got to do something else.’
He added: ‘I said before Christmas that the VAT rate I regarded as permanent because it is a structural tax change.’
Well Ladies and Gentleman, I hope you made the most of the January sales before today because you can look forward to confusion for what some retailers are saying up to a four-week period while they get round to changing all the price labels around their stores and you’ll just have to wait until you get to the tills for the shocking change in price which could be hundreds of pounds on some of the higher priced items. Just to put the cherry on top of an already sour cake, it seems retailers are taking advantage of the increase by adding just a little bit more on top of their 2.5% increase, thinking we won’t notice.
A report by consultancy KPMG also found almost 60 per cent of retailers, including shops, restaurants, gyms and mobile phone companies, intended to put up their prices by more than the 2.5 percentage point increase. Instead, many will implement far higher increases of between 5 per cent and 8 per cent.
Labour leader Ed Miliband warning families that the increase means ‘the squeeze starts here’.
Claiming every family would be £359 a year worse off, he said: ‘The squeeze designed in Downing Street will come to your street, to the high street, to every street up and down this country.
‘They will be taxing you with higher VAT when you fill up your car. They will be taxing you when you phone home on your mobile. They will be taxing you higher when you go out and get a cup of coffee.
‘And when you pick up a DVD for the kids on the way home they will be taxing you. This is the wrong tax at the wrong time.’
He added that the Government was ‘following a course that no other major industrial country is following in terms of how far and how fast they are cutting’.
‘By taking money out of the economy, they put jobs and growth at risk. The VAT rise alone, people tell us, will cost up to 250,000 jobs up and down this country, at a time when unemployment is already rising.’
Let’s just say, I’m glad that like every year I’ve still got a freezer full of bits and bobs left over from the Christmas period because bits and bobs is what I will be having for tea as I live in fear of the weekly shopping bill. Although, I’m glad to hear that some retailers are going to give us a bit of a break from the pinch of January that we all face after the cost of December. As TESCO say in their own advert ‘you should be making savings not sacrifices’ and I would like to say hear! hear!