Proposed Vat reduction

[chris-suffolk]

Not sure if anybody can help. I've searched the net, and can't find anything.

One of the ideas being banded around is that a 5p reduction in Vat would save £1300 for the average household, but I can't find any background calculations.

From my own calculations, a reduction of 5p would reduce goods from £1.20 to £1.15. So to save £1300, as claimed, I reckon you need to spend £31200 on Vat registered goods. With the average household disposable income being about £31400 (ONS figure), I just can't make the figures add up. There's mortgage/ rent to pay and most food is Vat exempt, significantly reducing the average disposable income well below £31200.

So where is the £1300 saving come from? Or are they just assuming households spend the whole of their disposable income of Vat'able goods, and hoping that nobody notices the errors?

 

[wafter]

lol - government policy in "is-totally-fabricated-bullshit" shocker

 

[Regular.Cyclist]

It’s been pointed out, by Rishi, that the plan is “incredibly regressive“. The average may very well be £1,300 but it will save the highest earners significantly more than that and the lowest earners significantly less.

 

[Gwylan]

Harlots Ruse.

Exactly. 5% off 25% of your spend is really not a lot.

Total cobras

Reflects the way our intelligence is insulted by our leadership.

They don't have a plan and in truth there isn't a clear plan. All we can be sure of is that there will be pain.

Can I claim I was mis-sold my mortgage when the rate takes off?

 

[PaulSB]

If Truss gets in expect the square root of FA.

 

[Gwylan]

If Truss gets in expect the square root of FA.

And the 3 fifths of 5 eighths?

 

[Deleted member 26715]

It’s been pointed out, by Rishi, that the plan is “incredibly regressive“. The average may very well be £1,300 but it will save the highest earners significantly more than that and the lowest earners significantly less.

And those that get paid in cash will still not pay any tax

 

[midlife]

Average household spend in the UK is about £600 a week so £31200........i guess they used that figure to arrive at the £1300 saving?

Not exactly real world scenario at the moment though....

 

[Regular.Cyclist]

And those that get paid in cash will still not pay any tax

Which is, of course, tax evasion and carries a hefty penalty if caught. Regretably the chances of getting caught are incred slim.

Those who legitimately pay no tax, due to their low income, will also benefit least from the majority of Truss’s plans.

 

[Deleted member 26715]

Average household spend in the UK is about £600 a week so £31200........i guess they used that figure to arrive at the £1300 saving?

Not exactly real world scenario at the moment though....

What kind of household can afford £600 a week on vatable items? Most households I know don't have £600 income

 

[midlife]

What kind of household can afford £600 a week on vatable items? Most households I know don't have £600 income

Just quoting official figures, as did the OP. As I say it's not applicable in the real world

 

[chris-suffolk]

Just quoting official figures, as did the OP. As I say it's not applicable in the real world

That was exactly my point. Without clarifiction, the figures are all just smoke and mirrors. What I can't work out is why all the media, with supposed respected journalism, have all just quoted Govt sources with no challenges or calculations at-all.

 

[neil_merseyside]

with supposed respected journalism,

Like who?

 

[Deleted member 26715]

Like who?

Isn't that statement an oxymoron, journalist, respected

 

[Low Gear Guy]

Not sure if anybody can help. I've searched the net, and can't find anything.

One of the ideas being banded around is that a 5p reduction in Vat would save £1300 for the average household, but I can't find any background calculations.

From my own calculations, a reduction of 5p would reduce goods from £1.20 to £1.15. So to save £1300, as claimed, I reckon you need to spend £31200 on Vat registered goods. With the average household disposable income being about £31400 (ONS figure), I just can't make the figures add up. There's mortgage/ rent to pay and most food is Vat exempt, significantly reducing the average disposable income well below £31200.

So where is the £1300 saving come from? Or are they just assuming households spend the whole of their disposable income of Vat'able goods, and hoping that nobody notices the errors?

I think the ONS figure is based on income after housing costs have been deducted.


Average household income is not a very useful measure as this lumps together single parents with young children and middle aged couples with two sons or daughters living at home and earning a good wage. Families in that position without a mortgage could have a family income of £100k+ which pushes the average up.