Twitter is alive this morning with a Labour attack poster on the subject of VAT
Unfortunately for Labour
- Most of the groceries in the picture are zero-rated for VAT. Even chocolate chip cookies. (Though biscuits covered with chocolate on one side, or decorated with a chocolate pattern, are standard rated, as everybody knows.)
- Labour is proposing to increase rather than reduce taxes on some of the “unhealthier” products in the basket.
- To get the figure of £450, you would need to spend over £20,000 a year on standard rate goods. Only the top two deciles pay this much.
With a reputation for economic competence hanging in tatters, it does Labour no good to demonstrate how poorly they understand VAT, and to get their sums so wrong on how much the average family spends on standard rated goods.
Meanwhile there is no sign of a policy. Is Labour sufficiently outraged to have a policy of changing the rate of VAT? Perhaps they could re-spend the bankers bonus tax on it – the one that will magically raise more money than the total amount of bankers bonuses that are paid.
Dear Labour Party, let me introduce you to the exciting world of advanced mathematics:
| Qty | Item | Cost | Of which VAT | VAT increase |
|---|---|---|---|---|
| Total | £9.35 | £1.56 | 19.5p | |
| 2 | Value Cola | 34p | 5.7p | 0.71p |
| 1 | Value lemonade | 17p | 2.8p | 0.35p |
| 1 | Ketchup | £1.20 | 20p | 2.5p |
| 2 | Premium bottled beer | £3.94 | 65.7p | 8p |
| 1 | Window cleaner spray | £2.00 | 33.3p | 4.2p |
| 1 | Bleach | 55p | 9.2p | 1.1p |
| 1 | Floor cleaner (half price!) | £1.15 | 19.2p | 2.4p |
I have obtained the prices of what appear to be the standard rated items from a popular supermarket website, dividing by 6 to calculate the fraction of VAT in the ticket price. There is a total extra cost on this basket, not of £450, but of 19.5p, largely due to the premium bottled beer.
This does seem to be a case of talking about the cost of living as much as possible in order to show that you care about it, and never mind the content of what you are actually saying. Most notable by its absence when it comes to groceries is Labour’s solution for energy and rents, of controlling prices. Perhaps they fear the “empty shelves” image, and rightly. Energy and housing don’t come on shelves, so shortages caused by incompetent regulation for the sake of a headline don’t create the same highly visible bad news and so are less likely to be politically damaging.
Yet the focus on cost of living is justified; it is not enough to cut income tax for low and middle earners and we do need to find more ways to exert downward pressure on bills.
* Joe Otten was the candidate for Sheffield Heeley in June 2017, is a councillor in Sheffield and is Tuesday editor of Liberal Democrat Voice.
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48 Comments
As international oil & gas prices have fallen, and as Sterling has appreciated, supermarket prices should have fallen. Adding to downward pressure on prices is increased competition in retail (hencecTesco’s troubles) and easier trade with agricultural exporters outside the EU. In addition, the recession has reduced land prices. So what is the cause of cost of living increases ? First they seem ‘policy made – in the UK’ rather than global trends. Second we have to look for increased monopoly power and tax/regulatory consequences to find the answer. Utility bills and national purchasing strategies of dominant retailers may be partyly to blame. I hope there are proper studies on these matters to help our policy development.
So has the Labour policy of reducing standard rate VAT from 20% to 17.5% (which was claimed would save families £450 in VAT) that was quietly dropped back in september 2013, now been resurrected?
But I suspect that we are misreading the claim which is probably what was intended. Yes it was the Coalition that actually enacted the increase in VAT from 17.5% to 20%, so what Labour are trying to say: They put £450 extra VAT on your shopping bill [by increasing standard rate VAT back in 2011]. If memory serves me correctly, this increase was a Labour policy, only it’s enactment was scheduled to occur after the 2010 election…
Amazing that Labour didn’t think about zero rated VAT.
If you’re paying any more than 25p for two litres of value coke, you’re getting robbed!
Is VAT chargeable on a giant pea pod if two of the peas resemble party leaders?
The ad says “£450 on your shopping bill”. People have a specific understanding of “shopping bill” that means “what you spend in Sainsbury’s” and excludes white goods and cars (for example). So what percentage of a “shopping bill” is VAT-able?
I found an article on thisismoney.co.uk that said the VAT increase would add £33 per year to the average supermarket bill – http://www.thisismoney.co.uk/money/bills/article-1696467/VAT-rise-What-supermarket-food-is-exempt.html. I love the rule for gingerbread men!
So that sounds like this “shopping bill” claim is based on a shopping bill that is about x13 the average. Hmm… Who *exactly* are these “hardworking families”?
And Ed Balls wants to run the economy?
Jon, only if the faces are painted on in chocolate.
Presumably Labour’s deffinition of hardworking families is similar to the Telegraph’s deffinition of the squeezed middle which in an article this week included someone earning a salary of £120,000 a year.
Isn’t the ad, dreadful as it is, simply a reminderof this?
https://www.libdemvoice.org/nick-clegg-reveals-tories-13bn-vat-bombshell-18755.html
OMG… Again the party is failing to see the point and respond correctly, it does not matter that half the products shown are zero vat, if a 100 people see that poster maybe 10 will be politically aware of the mistakes (I personally don’t see them as mistakes well the poster should of had a fuel pump shown to emphasise the point) the other 90 will get the message.
The party needs to get out of the school yard tit for tat (grownups) and respond correctly, doing the above is just stupid, because people know, they don’t guess or pretend they know bills and shopping has gone up as their own incomes have reduced or stood still.
The other point at most major supermarkets the goods on sale are not just food, shopping covers many things now.
Jim
Just for the record Joe, another reason that Rent doesn’t appear in their calculations is that they would have to first raise the VAT on rent by 20% before cutting it by 2.5%.
Similarly with petrol, gas, electricity etc where the increase would be 15% in order to reduce it by the 2.5%.
Meanwhile they are proposing imposing a 10% income tax rate on people that this Government has lifted out of paying tax all together.
Oh, and by the way, they also moved an amendment to the budget that rather than keeping the higher rate of tax at 50% would have reduced it back to the 40% that they charged throughout their administration. I know that some of our parliamentarians have failed to point this out, but the big question is whether Ed Balls was lying about his intent or his competence to deliver?
Good post Joe. A truly pathetic attack by Labour, which maybe even trumps their recent dreadful PPB.
The clever but clueless brigade who do all these very bright and clever things are the same in all parties. Put simply, “they don’t know what they’re doing”.
Tony Greaves
There’s been a lot of nonsense put out by all parties recently, I only found out recently that the Advertising Standards Agency doesn’t have the remit to cover political adverts and neither does the electoral commission. We’re in an odd situation where I can complain about something pretty trivial like advertised broadband speeds but not complain when a political party advertises something that is completely factually incorrect that could influence who runs the country,
I’m all for free speech and everything but when something is factually incorrect and misleading, shouldn’t it be dealt with by the ESA?
At least Lib Dems would never …. oh wait a minute.
(https://www.libdemvoice.org/nick-clegg-reveals-tories-13bn-vat-bombshell-18755.html)
g, we warned about the VAT bombshell, we offered an alternative in the mansion tax, and the voters made their choice.
Will Millinship 9th May ’14 – 12:09pm
If you’re paying any more than 25p for two litres of value coke, you’re getting robbed!
Err, Tesco charge 89p for 2L own brand cola……
——————————————————————–
I agree with Jim that the point of the poster is being missed by opponents in order to make a noise.
How about dealing with the issues raised ?
After all, the LD’s would never produce any misleading literature would they……..oh, but wait a minute:
https://www.libdemvoice.org/nick-clegg-unveils-council-waste-and-incompetence-39731.html
Oh…….
Joe Otten, hmm, isn’t it fairer to say that the Liberal Democrats made a choice to support a decision they’d previously criticised, going against the wishes of that part of the electorate that voted for them ?
@MartinB “Tesco charge 89p for 2L own brand cola..” I don’t know where you shop but the Tesco website advertises 2L own brand cola at 57p and 2L Everyday Cola at 17p!
g, No, no it isn’t fairer to say that.
Read the text in the article you link to. The allegation is not that the Tories are people who like dropping tax bombshells. It is that there is gap in the Tory tax and spend number that will require a tax rise of this magnitude (and on previous form, VAT is proably where it will appear). That observation was correct, as it proved.
Did we win enough seats in the commons to replace that VAT rise with a mansion tax? No, we didn’t. However on the thematic issue of the balance of the tax system between the rich and poor, we saw a complete capitulation by the Tories, with the result that the tax system is significantly fairer that it was under Labour, with the better off paying a greater share of the burden, the top 10% in particular. So Liberal Democrat voters, despite being in a minority on this issue, got their way, and would have got a worse result had there been no compromise on particular taxes.
http://www.tesco.com/groceries/Product/Details/?id=281506986 is the one I found.
Never mind dealing with the point of the poster, let’s just bicker about the price of own brand cola.
Jeez.
Joe Otten
According to the Lib Dem’s own figures the mansion tax would raise £1.7 billion, a long way short of the £13.4 billion raised by the VAT increase , so to suggest you could have replaced with the one with the other is a nonsense.
As to your other point. 75% of the gains from the raising of the tax threshold went to people in the top half of the income distribution. It’s clear that this policy was just a clever wheeze to allow Clegg to pose as a progressive while pursuing a thoroughly Tory agenda of cutting taxes for the rich and the wealthier parts of the middle class.
Basically Labour are saying our deficit, which they left at an historic high, should be billions of pounds larger than it is currently.
Which taxes would they have put up to cover this shortfall and how much would they actually have raised?
These are truly sad, hypocritical tactics from Labour who clearly have no idea whatsoever how to make the national finances add up.
@Joe Otten
The Lib Dems still voted for it, despite it not being policy. In a minority government, the Conservatives might not have got this through
@MartinB “let’s just bicker about the price of own brand cola.” But that is precisely the point. Labour in office had a record of throwing money at problems with little regard as to whether they were getting value for money. The Labour poster, like so much Labour campaigning, is all image, with little substance – And this from a man, who promised an end to knock about politics and claimed intellectual superiority over others.
I have hardly ever seen such a core vote strategy. Labour will lose voters if they only try to appeal to the “tories are evil” crowd.
I think this is one of those attacks that unless you spend an age disentangling what it is likely to mean, and explaining it (by which time your audience is thoroughly bored or gone to sleep) you cannot really “disprove” it. On the face of it it looks as if the Coalition is being criticised for levying extra VAT, but by how much, over what period? So a random big number (£450) is quoted to give credence to the ad, at least for those who spend little time looking at it.
The “two peas in a pod” vibe is, I think effective, and if Labour continue to use that sort of imagery (implying the similar privileged backgrounds of the two leaders) they might achieve what they didn’t at the Crewe and Nantwich byelection with their naked appeal to class warfare, using the word “toff” and overt imagery (top hats etc) to try to get the message home. The latter was not effective, and would only appeal to a small minority.
Quite correct that the mansion tax would not have raised as much and I should have referred to a package of measures including the mansion tax.
We can all speculate on counterfactuals regarding how other governments might have closed the gap, but it is worth noting that Labour’s MO is to pile on Council Tax and “stealth taxes” as well as NI, overall more regressive than VAT.
Finally back on the cost of living, it is worth noting that the Single Market is worth £480 a year each to us in better prices.
http://britishinfluence.org/europe-day-aprils-fools-day-eurosceptics/?utm_content=buffer359bc&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
It’s only “backfired” for them if the voters who might have given it credence see the Twitter storm. I doubt it.
Joe Otten
Did we win enough seats in the commons to replace that VAT rise with a mansion tax? No, we didn’t.
But that doesn’t negate my point that the Lib Dems went against a stated policy used to win votes once they were in government. You really don’t see why this is a problem, especially coming after the ‘no more broken promises’ broadcast?
@ Eddie Sammon
“Labour will lose voters if they only try to appeal to the “tories are evil” crowd.”
Labour is not only trying to appeal to the “Tories are evil crowd”. The point being made is that the Tories wouldn’t be able to do what they do without the Lib Dems’ support because they wouldn’t be in a position to govern .
Eddie Sammon: You are right that the ‘evil Tory’ demonography is largely a core vote strategy, however such a strategy is more appropriate to the proportional representation system used for MEP elections. This is why this election is an opportunity for Lib Dems to be very positive about how Lib Dem MEPs have been working.
It is also possible that Labour feel that many who deserted Labour over the invasion of Iraq are still not prepared to give them backing. Rather than confront the real demons of its own past, Labour finds it easier to conjure stock cartoon demons from a satirical picture of the Tory party.
@Joe Otten
Well, when I decide how to vote, I consider the track record in power. Surely the decision to go into government with the Tories deserves such scrutiny.
Hi Mack, but the Tories wouldn’t be able to do what they are doing if Labour didn’t get booted out. Labour are partly responsible for this government too, not to mention Iraq, tax loopholes for the rich and a millstone of debt around the country’s neck. 🙂
In all seriousness, I’d be happy to work with Labour if they were the largest party, I just think they can do better than this!
Hi Martin, yes I understand a core vote strategy, especially as you say re-building credentials on the left, I just think in my experience if you campaign too negatively then it can offend the very people you are trying to win over, due to people having friends and family members that are tories, little t or big T!
@ Eddie Sammon,
” . . but the Tories wouldn’t be able to do what they are doing if Labour didn’t get booted out.”
I can hardly disagree with that Eddie. But the problem is we did get booted out, the Tories halted at the winning post and had to be hauled over it by the Lib Dems. In the process the Lib Dems became diminished in terms of principle and reputation. Clegg epitomises the cynical Lib Dem position, hence the “Un-Credible Shrinking Man” . If Charles Kennedy had been your leader throughout the period of Coalition I think the “Un-credible Shrinking Man” Epithet would have been very hard to pin on him and the Lib Dems would be much higher in the polls.
As for Labour leaving “a millstone of debt around the country’s neck”, you’re still not peddling that tired and discredited old canard, are you? Even the most isolated social isolate knows by now that there was a global crisis occasioned by the greed of those in the global fiancial sector. You think that repeating false information like that endears Labour Members towards you? Thanks for your offer of help though, but as you must appreciate, come the next election I’m rather hoping we won’t need it. And aren’t you assuming rather a lot to prematurely offer such help? At 8% in the polls you may not be in any kind of position to help anyone except yourselves to salvage something from the ruins of your party.
Lol, Mack, I never like to blame Labour for all the economic crash, which is why I inserted the word “partly” before responsible and my list of criticisms. I’ll try to be clearer next time!
Best wishes
Criticising the poster for showing items which do not amount to a £450 VAT increase is rather like criticising the following poster on the grounds that the Tories never dropped bombs on anybody’s houses :-
http://mole45.files.wordpress.com/2010/07/libdemvat.jpg
The poster looks amateurish, but as a striking reminder to people of how the Lib Dems massively increased VAT after criticising the Tories for planning to do the same, it’s successful enough.
This can go on the long list of reasons why Labour’s economic management is dire. They still don’t seem to understand that there was a reason we were hit so hard by the financial crisis and countries like Canada weren’t, and that had a lot to do with what they got up to for the decade they were in office before the crisis hit. They desperately try and off-load the whole thing by talking about a “global financial crisis”, as though national policy choices weren’t made before it that led to different countries experiencing the crisis in different ways. Now they can’t even look up what’s zero-rated before they stick it on a poster. Thanks Labour. Thabour.
The ASA ducked out of political advertising (it used to regulate it) because the political parties – and it may have been Labour in particular – were simply refusing to amend or withdraw the adverts even when they were as misleading as this. If Tesco had run this as a comparison with Asda, then the print ads would have to be withdrawn. The only way to get these under control is regulation by ASA – but of course, which political party is going to go for that?
It was suggested on last night’s “Now Show” that Ed Miliband has never been in a supermarket.
Nor, it would seem, have his advisors.
@ Eddie Sammon
“which is why I inserted the word “partly” before responsible and my list of criticisms.”
Sorry, I missed that, in the course of the red mist descending as it always does when I suspect the Lib Dems of trying to blame us entirely for the Global Crisis.
This type of ‘misinformation’ puts Labour in the same league as UKIP, with some of its misleading posters
“there was a reason we were hit so hard by the financial crisis and countries like Canada weren’t”
http://blogs.r.ftdata.co.uk/gavyndavies/files/2012/04/ftblog245.gif
Looks like Canada being hit by the financial crisis, about the same as France.
“We should have been resilient like France” doesn’t have the same ring to it.
Think 31 out 34 OECD countries had recessions. That’s pretty international. More so than the supposedly devastating Eurozone recession.
“Labour is proposing to increase rather than reduce taxes on some of the “unhealthier” products in the basket.”
They might do, but they haven’t yet. That was an internal discussion doubtless leaked to the press to see how it went.
“To get the figure of £450, you would need to spend over £20,000 a year on standard rate goods. Only the top two deciles pay this much.”
I’ve not that much confidence in the figure, but that link is 3 years old.
I said it before, but are you in a position to worry about a graphic when you keep repeating the utter rubbish that you’ve “taken the low paid out of tax” and “kept your promise”?
Taken out of one tax only, and left lots of them in NI. And the promise was to fund it via a mansion tax. Not by VAT rises.
I am a swing voter the add in question is assuming a spend of over £20k on vat rated items did labour consider lots of people don’t have so much disposable income left after food and housing
What about people who get the food from food banks I think its insensitive and will backfire as in my opinion it should
@Joe Otten
I know that this thread has been around for a while, and far be it from me to defend Labour’s poster, but it should be pointed out that the poster does not claim that this is £450 per annum as you have assumed. Nor does it claim to be £450 on a single shopping bill but you did not jump to that assumption. As my old boss was fond of saying, when you “assume” you make an “ass” of “u” and “me”.
Spread over three and a bit years since the two peas in a pod increased VAT, Labour are claiming that the coalition has put circa £140 each year on your shopping bill.