Thursday, 17 October 2013

"British Gas urges customers to ditch David Cameron after he hikes taxes by more than 10%"

From The Evening Standard:

Struggling London families were dealt a huge blow two years ago when the Conservative-led government increased taxes on output and employment by 10.6 per cent.

The bombshell from Britain's biggest government reduced disposable incomes of an average household by nearly £1,000 and sent their annual total tax bill spiralling to a record £20,000 a year...

The VAT and National Insurance rises, which came into force in 2010, did not trigger a storm of protest and consumer groups did not accuse the Liberal-Conservative coalition of delivering a "big, nasty" shock to taxpayers that will force thousands to make a "heat or eat" choice over the winter.

British Gas chairman Sir Roger Carr today said the tax rises were "disappointing" and urged people to try to save money by switching governments.

Shadow energy secretary Caroline Flint said: "People are too feeble to stand up to the government. Britain's tax and welfare system is not working for ordinary families and businesses.

"Heck knows how we keep getting away with it."


Ian Hills said...

If MPs could be wired up to our remotes and enough voters press the vapourise button we could do a SPECTRE on unpopular politicians.

Then the survivors could have a go....

The Stigler said...

I remember how the only time Hague got a lead was during the fuel protests when he promised to lower tax on petrol by about enough to save a fiver a week.

Which makes me conclude this: if you want to create a low-tax state, you have to remove things like PAYE and all other opaque taxes. You have to get people to see how much tax they are paying.

Mark Wadsworth said...

IH, seems fair enough.

TS, exactly. People hate in-your-face taxes like fuel duty or council tax, despite they each only raise about 4% of all taxes and are the least-bad kind of taxes economically.

Conversely, people actually like stealth taxes like VAT "a tax on consumption" and National Insurance "employers are making a contribution" and "it pays for my pension".

So it's an uphill battle :-(

The Stigler said...

It's not that they like stealth taxes. It's that they don't see the number. Or they perceive the problem as being the seller.

Look at how much people complain about petrol prices, but most of that is tax and VAT. And the government play a distraction game by talking about whether they need to look into the competitiveness of markets, to lead people into thinking that petrol or gas companies are taking the piss.

Mark Wadsworth said...

TS, people are indelibly thick.

The pub industry constantly wails about Beer Duty and undercutting by supermarkets.

But supermarkets pay the same Beer Duty on much lower prices.

Where the pubs are at a huge disadvantage is VAT. The VAT on a pint in the pub is clearly three or four times as much as on a can in the supermarket.

If pubs wanted the playing field, i.e. relative selling prices, to be levelled, they would argue for much lower VAT, even if that were at the expense of higher Beer Duty.

The only publican to actually spot this effect is the chap from Wetherspoons.

The Stigler said...


You're right, but Tim Martin knows why pub takings are down. He did his own smoking ban that then got cancelled when all those people who said they'd go more often didn't.

The complaints remind me of complaints about why the high streets are closing. Councils could do more to help town centres, but the internet destroyed record shops, bookshops and travel agents.

I'm sure that changing VAT would help pubs but the difference, because of the labour and staff, will be tiny.

Kj said...

TS: VAT cuts have allegedly done quite good job in the restaurant sectors of France and Sweden.

Mark Wadsworth said...

TS, of course VAT applies to the wages as well, they are included in the final selling price and the VAT is on the final selling price!!

See here.

What "the high street" needs is parking spaces. The proper ratio is about the same surface area of car parks as surface area of shops, i.e. if you have ten acres of "town centre" you need five acres of car parks and five acres of shops.

Kj, exactly, those VAT cuts for pubs and restaurants in Ireland, Seden (now reversed) and France really did the trick and far better than even I would have expected.