Example: Go to a pet shop and buy loose bird seed and no vat added. If that bird seed comes in a sealed bag that has been bagged else where then vat is added to that bird seed purchase.
This is a ludicrous concept as its still bird seed. Food, for human consumption, in the UK is classed as an essential item and not a luxury so it doesn’t have vat added to it, yet bird food is classed as a luxury.
Its not about bird seed but the same concept. All fresh food that has not been processed should be vat free and remain vat free to ensure the essentials for human life is as cheap as sensible.
Any food that is processed should have vat on it. To save the confusion this could be a flat rate of vat or a sliding rate depending on the level of processing.
Examples: apples that are sold loose no vat, apples in a sealed poly bag 1% vat added, apples in a sealed bag on a paper tray 2% vat. Fresh loose swede no vat, swede wrapped in plastic 1% vat added, frozen swede 2% vat added. Potatoes loose no vat, poly bagged 1%, frozen 2%, in a ready meal 3%
The greater the level of processing the greater the vat added making fresh food the better option, for us, our resources, the planet, pollution, farming, packaging & landfill.
This should also cover the amount of salt, refined sugar and fats that our in processed foods. The higher the level of these ingredients the higher level of the vat added to that product. This is for better health of our population.
This should also include all takeaway food and restaurant food unless its made fresh. Salt, refined sugar and fats should have vat added when sold at wholesale. Salt is the difficult as its not heavily processed and is used as a preservative.
I have no idea how much adding 1 or 2 or 3% onto these highly processed goods would cost on the weekly shop or how much money it would generate for the treasury. Individually it would not be a big increase. Average food shop per week per person is £25, £100 for a family 4 so an extra £3 a week on the food bill £156 per year, but this depends on what you class as food. There would be a choice buy fresh and unpackaged, no vat buy processed and packaged vat added higher shopping bill – consumers choice.
Like anything you can’t take without giving back. No vat on food as its essential but we pay vat on our utility bills. Is it not essential that we keep warm, wash ourselves in hot water, use lighting, watch tv and use computers? There is 5% vat on these utility bills!
Bring in vat on processed and prepackaged foods for obvious reasons that should easily be accepted by the public but at the same time reduce the vat added to utility bills but these shouldn’t have vat on them anyway.
I have written before about the way the mortgage interest rate is used to kerb spending when inflation is rising but this has the potential to make people homeless but only picks on people who have mortgages while the rest of the population keep spending with no care. Having vat on processed and packaged foods can be increased at a time for inflation control as its a non essential choice. You don’t have to buy a ready meal you can just buy all the fresh items and make a meal, we won’t go hungry.
Vat on business. For small businesses this is a real bind, its like having a member of staff that doesn’t contribute to the running of the business but has to be paid a wage even before any of the business overheads have been paid. Small business can have a large turnover but doesn’t mean it can make money. The answer is that what ever you charge as a price than that should include a portion of vat which is paid. A business has fixed over heads which have to be paid. If it footfall drops these over heads still have to be paid along with the vat but the price to the customer is fixed. The next month footfall increases, overheads remain the same, the business sees extra money to cover the previous months shortfall but then as vat is charged as a percentage the business gets a higher vat bill removing that months benefit of increased footfall. HMRC is the beneficiary of the increased turnover and not the business.
Present vat registration turnover level is £85,000. You need this amount to employ just 4 members of staff. This could be the boss, secretary and 2 staff. £85,000 take 20% vat off it of £17,000 then the real turnover required is £102,000 to ensure costs of £85,000 are still covered or it drops to £68,000 and the loss of someone’s job yet the business is busy and requires 4 people but can only afford to pay 3!
I can’t give a solution to this, except technology maybe the solution. Things have to change as the world is changing and so is business. Vat on small business is an out dated concept.
Leisure/SPORT businesses should not pay vat even more so if they supply facilities that children can access. As the nation gets fatter and has no level of fitness, as we come out of lock down and have to restart, deal with metal health issues and get the nation moving, then sport and fitness should be a priority. This should be a long term change as good physical & metal health is essential for a healthy society.
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