Ed Miliband says that the increase in VAT tonight (3-4 Jan 2011) from 17.5% to 20% will cost the average family £7.50 a week. Either his statistics are out or I live in a different world to the “average family” (ref: BBC News Website 3 January 2011: VAT rise will hit families, warns Miliband)
If £7.50 is the cost of a 2.5% increase in VAT, that would imply that the average family spends £300 per week before VAT on vatable goods – which in today’s money is £352.50 per week on vatable goods.
Today £300 + 17.5% = £352.50
Tomorrow £300 + 20% = £360.00
Now my spending falls into the following areas:
- Taxes – like council tax: not Vatable
- Fuel: currently 5%
- Food: avoid chocolate and food is zero rated – no VAT
- Petrol: ouch – will be hit by the increase
- Chocolate, DVDs, Entertainment, Broadband subscription, Adult Clothing, White Goods etc.: Fully Vatable – will be hit by the increase
So does the average family today spend £352.50 per week (£18,330 per year) on just the last two categories? I have drastically cut spending on the last category already – and cut back on use of the car (but possibly spend a similar amount on vatable fares).
I think Ed Miliband must think that “average families” are living a very luxurious life. Perhaps he is not “all in it together” with the rest of us either! Or to win a by-election he is prepared to be loose with the truth (but isn’t that why we are having the by-election anyway?)