The rise in VAT introduced by the Conservative/Lib Dem coalition government has hit poorest families harder than wealthier ones the latest figures from the Office for National Statistics have suggested.
During the General Election last year, the Liberal Democrats had run a campaign warning voters that the Conservatives would deliver a VAT ‘bombshell’ which would see a 3% rise in the purchase tax costing families an extra £389 a year.
At the time Lib Dem leader Nick Clegg assured voters that his party would not do the same:
“We will not have to raise VAT to deliver our promises…Let me repeat that: Our plans do not require a rise in VAT. Tory plans do”
However soon after the election the Lib Dems broke their promise and agreed with their new coalition partners to raise VAT by the predicted 3%.
Eastleigh’s MP Chris Huhne even appeared in Parliament to deny that VAT was a ‘regressive tax’ –one which hits the poorest the hardest – and claimed a study from the Institute of Fiscal Studies showed that VAT was not regressive at all,
However earlier this week the ONS published their latest report on VAT which they say shows that the poorest fifth of UK households paid a higher proportion of their wages on VAT last year than they did in 1986 and that while 10% of their disposable income went on VAT while the figure for the richest fifth of households was just 5 %.