28 Jul 2014
Statistics published by HM Revenue and Customs (HMRC) show that VAT now generates over £104.7 billion per year, a record figure.
VAT was raised from 17.5% to a high of 20% in 2011. Figures released show that the total tax collected in 2013/14 was £488.5 billion.
Jonathan Isaby, chief executive of campaign group Taxpayers’ Alliance, said: ‘The VAT hike was designed as an emergency measure but it’s looking more permanent by the day, with the Treasury enjoying the record benefits.
‘VAT impacts the poor twice as hard as the rich, pushing up the price of everyday items and making life harder for millions of people’.
This news comes along with proposals by local councils to tax big businesses more for operating in their areas. 20 councils, led by Derby City Council, put forward the idea of a ‘Tesco Tax’ – with the hope of raising up to £400 million per year.
Those submitting the proposal have said that the cost to businesses would be only a fraction of the costs that supermarkets were encumbered with when VAT was raised in 2011.
With VAT and other outgoings, many consumers are concerned that the economic environment could put pressure on retailers to raise their prices, which would have even more impact on consumers.