Tuesday, 26 June 2012

VAT hurts poorer families more

The hike in VAT had the sharpest impact on poorer families, according to the Office for National Statistics.

A temporary cut in the VAT rate to 15% was followed by a rise to 20%, resulting in a significant jump in the cost of shopping, save for items such as food which are VAT-free.

Between 2010 and 2011 the poorest fifth of households saw the biggest increase in the proportion of their disposable income paid in indirect taxes such as VAT, up from 28 per cent to 31 per cent.

The richest fifth saw the amount paid rise from 12 per cent to 13 per cent.

The figures also show that average disposable income, after adjusting for taxes and benefits, fell by £200 in real terms.

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