A new report shows the Governments rise in VAT could hit not only the poor, but also the middle class heavily, with some areas being particularly drastically hit.
The Government’s proposed rise in VAT from 17.5% to 20% in the new year will hit Scotland, Wales and the North harder than the Southeast and London according to new research by the marketing firm, Acxiom.
The report covered in today’s Daily Mail separated the impact of the VAT rise on discretionary spending into four quartiles. The two quartiles most resilient to the regressive tax rise were overwhelmingly situated in London and the South East. Among the 10 places least likely to be affected by the VAT rise are the Tory heartlands of West Berkshire, Buckinghamshire, Surrey, Hertfordshire, Wokingham, Windsor and Maidenhead, and Oxfordshire where David Cameron’s Witney seat is situated.
According to the report people living in Hull, Windsor and Maidenhead, Blaenau Gwent, Stoke-on-Trent, Leicester, Middlesbrough, Orkney, Eilean Siar, Ceredigion, Merthyr Tydfil, and Gwynedd will be worst affected.
The conclusion of the report outlines that some in the ‘squeezed middle’ will be among the worst affected by the tax change:
“The UK is likely to suffer another collective financial headache owing to the January 2011 rise in VAT. Not only will household expenditure on goods subject to the sales tax rise by more than £6 billion, consumers will also face a drop of more than £2 billion in discretionary income…
“It is the groups that are already overstretched that will feel the biggest impact on their overall household expenditure. What is surprising is that two groups not normally associated with being overstretched – those who are “comfortable” and those with “an acceptable standard of living” – are likely to be put under pressure by the drop in their discretionary income brought about by the rise in VAT. ‘
Among those badly hit will be those with teenage children and large families due to their higher level of discretionary spending and living costs in comparison to other households.
‘We are all in this together’? Except, once again, some are in it more than others.
23 Responses to “Two nation Conservatism: VAT rise hits North harder than South”
Anon E Mouse
Mr.Sensible – Well you’ve been consistently wrong so far about growth and double dips and the economy in general.
You’re wrong again and this “article” is just an excuse to have a dig at the government – one which serves to remind the readers that Labour, under the leadership of the dithering Ed Miliband, really has nothing to say.
It has no obvious merit whatsoever Mr.Sensible and my advice is to calm down, relax and ignore it as the country gets back to a semblance of normality after 13 horrible years of a Labour control freak government…
Matthew Sinclair
.@leftfootfwd report VAT hike will hit North harder http://bit.ly/hTWd5U – one more policy entrenching econ. dependency
Mr. Sensible
Mr Mouse, with the OBR upgrading it’s forecasts for 2010 it’s easy to conclude that.
However the OBR has downgraded it’s forecasts for 2011 and I think 2012, and these are of course uncertain.
It is not true to say that I want things to go wrong; I am just pointing out the risk this government is taking.
The British Chambers of Commerce have I believe expressed concern about this.
Bradley
Mr Sensible, are you sure that the forecast for growth is being downgraded?
http://onusprobandy.blogspot.com/2010/11/compounding-percentages.html
It appears that when we look beyond the polemic bias, it’s actually not.
Spir.Sotiropoulou
RT @leftfootfwd: Two nation Conservatism: VAT rise hits North harder than South http://bit.ly/fNTs2Q