New figures reveal that families with children have paid an average £1,800 more in tax, as a direct result of the government’s VAT hike.
David Cameron and the Tory-led coalition government increased the rate of VAT from 17.5% to 20% in 2011. A move which has had a devastating impact on low-income families, many still struggling to cope with rising energy prices, cuts in welfare benefits and years of below inflation wage rises – a real-terms cut in income.
VAT can be charged on a number of different items including food, adult clothes, gadgets and household appliances – among others.
Items such as gas and electricity for the domestic home is usually charged at what is known as the ‘discount rate’. Some other items are ‘zero rated’ or ‘VAT free’: such as baby wear, children’s clothing, children’s footwear and newspapers.
However, treasury figures analysed by Labour reveal how the 2.5% hike in VAT costs a couple with children £450 a year on average. This means that over the course of this parliament hard-up families have paid a total of £1,800 more in tax under David Cameron.
Food bank charity Trussell Trust helped to feed more than 913,000 people with three days worth of emergency food aid in 2013, including 330,205 children – up from 40,898 in 2009/10.
The second most common reason given for turning to food banks is ‘low income’ (20.29%), while benefit delays are cited as the primary reason (30.93%).
Labour said the Tories have gifted the top one percent of earners with tax cuts, “while everyone else faces a cost-of-living crisis”.
Shabana Mahmood MP, Labour’s Shadow Exchequer Secretary to the Treasury, said: “Before the last election David Cameron and George Osborne said they had no plans to raise VAT, but that’s exactly what they did after they got in.
“Raising VAT on families and pensioners is what Tory governments always do”, she said.
“These figures show that over the last four years a family with children has paid £1800 more in higher VAT under the Tories.”
She added: “The truth is that the only people who have got a big tax cut under this Government are those earning over £150,000.
“And while everyone else faces a cost-of-living crisis, the Tories have refused to rule out another VAT rise in the next Parliament to pay for their £7 billion of unfunded tax promises.
Shabana Mahmood said a Labour government would “balance the books in a fairer way”.
Adding: “We’ll cut taxes for 24 million people through a lower 10p starting rate of tax, freeze energy bills, cut business rates and expand free childcare for working parents.
Labour would also reverse “David Cameron’s £3 billion a year tax cut for the top one per cent of earners.”