Sunday, January 09, 2011

VAT increase

I'm no keener on VAT going up to 20% than the next person, but I think these headlines about "VAT increase hitting the poorest hardest" are mostly just party political point scoring.  When you think about it, it's got to be based on the premise that the poor and the rich spend their money in the same way on the same things, which is an obvious nonsense.  At the lower end of the income scale, it stands to reason that a greater proportion of income will be spent on the staples, which for the most part are VAT exempt, so the increase will have no effect. That's not to say that the poor will not be affected by it, but probably overall by no more than the rest of us.

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