Shoppers could face VAT on food

[SazzyLilSmartAzz]

06 Mar 2010

(VAT - Value Added Tax)

The imposition of VAT on groceries is being actively considered by Whitehall officials (UK) as a radical means of reducing the national deficit.

The feasibility of introducing the food tax is being raised informally between civil servants, industry bodies and retail insiders.

So politically-sensitive is the move that all the talks are occurring "under the radar", according to retail industry insiders.

Basic supermarket groceries are currently immune from VAT, along with books, newspapers and children's clothes.

However a VAT levy on food of between three and five per cent would raise billions of pounds in tax and help reduce Government borrowings, which are expected to hit £180 billion this year.

Food sales from supermarkets are estimated to total £120 billion a year.

The tax would be controversial as it would disproportionately affect poorer families. Any move to impose it would be vehemently opposed by the UK's large food retailers, who argue that it would be a 'tax on living'.

Justin King, the chief executive of J Sainsbury, said this weekend that a tax on groceries would be a "very bad idea". Another supermarket executive said last night that the tax would be "political dynamite".

The topic is being tentatively brought up in Whitehall as politicians, lobbyists and civil servants examine possible ways of raising revenues, according to multiple retail industry sources.

An increase in headline VAT above its current 17.5 per cent level is also being mooted.

One senior industry executive said: "VAT on groceries is being talked about in very tentative terms, rather than as a formal consultation. But it is happening in all parts of Whitehall. It is informal and sensitive. It is such a red hot topic."

"They are thinking the unthinkable. It might not happen, but don't think that people are not having that conversation. They are."

A Treasury spokesman said that there was "absolutely no question" of the current Chancellor imposing VAT on groceries.

"It is not remotely on the table," he said.

However civil servants are examining all the permutations available to the next government to bring in revenue following the election.

The food industry is against the move. Mr King said: "On food, VAT acts in a very regressive way. The poorer you are, the higher the proportion of your household income you spend on food.

"So if you were to introduce VAT on food that would be very damaging for the poorest in our society. So I think that would be a very bad idea and I think most governments would understand that."

A second supermarket chief executive said: "My view is that it would be totally inappropriate. You are taxing what people have to eat to live. Groceries are not discretional spend."

He added that if the new tax were imposed, retailers would have to pass it on to customers in the form of higher prices.

It is understood that the British Retail Consortium (BRC) is in the process of compiling a major report into the impact on the consumer economy on both direct and indirect taxation. The report will be published prior to the election.

Stephen Robertson, the director-general of the BRC, said that a tax on food could be damaging to the economic recovery.

"My feeling is that it could be dangerous to apply a break on spending at this point in a very fragile recovery," he said.

On Friday, John Lewis Partnership warned that shoppers are already wary of higher taxes.

"Consumers will also be wary that further out they are very likely to face higher taxes as part of the major corrective action that will be needed to rein in the government finances. It has been mooted for example that VAT could rise to 20pc," the retailer said.

Late last year the National Institute of Economic and Social Research said that families face the prospects of income tax increases and having to pay VAT on previously exempt goods such as basic food if the Government's budget is to be balanced.

Shoppers could face VAT on food - Telegraph

[Scott]

As a means to reduce national deficit? HA! More like AS A MEANS TO LINE THEIR POCKETS SOME MORE! What nerve. They want to tax people who have already been pushed to the brink. They have NO mercy and their greed knows no bounds.

I don't think most Americans realize just how bad the Brits have it. They get taxed on EVERYTHING! And the cost of food is astronomical compared to the cost in the States. Seriously, they don't have ANYTHING left for leisure spending once they pay their rent, counsel tax (which nearly doubles their rent, in many instances), outrageously high rent (of course all the immigrants live for FREE..thanks to them), utilities and food...

Life is NOT easy there. Not for the honest citizen who is not only pulling his own weight, but who is also being forced to support his immigrant neighbors AND line the pockets of these Jewish bastards who are squeezing him for all he has.

[SazzyLilSmartAzz]

Originally Posted by scott

As a means to reduce national deficit? HA! More like AS A MEANS TO LINE THEIR POCKETS SOME MORE! What nerve. They want to tax people who have already been pushed to the brink. They have NO mercy and their greed knows no bounds.

I don't think most Americans realize just how bad the Brits have it. They get taxed on EVERYTHING! And the cost of food is astronomical compared to the cost in the States. Seriously, they don't have ANYTHING left for leisure spending once they pay their rent, counsel tax (which nearly doubles their rent, in many instances), outrageously high rent (of course all the immigrants live for FREE..thanks to them), utilities and food...

Life is NOT easy there. Not for the honest citizen who is not only pulling his own weight, but who is also being forced to support his immigrant neighbors AND line the pockets of these Jewish bastards who are squeezing him for all he has.

I agree 100% and feel so sorry for them but my greatest concern is this will happen in America eventually. Time to learn to garden friends and I'm going to start come spring.