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Another stealth tax?

Last week I read about Gordon Brown's plan to cut 2p of the petrol tax. Then the other day, EDF announced that they would be putting up household fuel bills by an average of 20%. The Government has not spoken out to condemn this move - why?
Well, I wonder if it has anything to do with the extra amount of VAT which will be collected as a result of this increase (assuming that other companies besides EDF follow suit). As well as the VAT, we have the extra tax on profits.
If my maths are correct,then based on 10 million households (this may be a conservative figure)seeing their fuel bills go up from £1000 to £1200 per year, the government will pocket an extra £35 in Vat from each one. Multiply this figure by 10 million, and you see the Chancellor profiting to the tune of £350 million per year.
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Re: Another stealth tax?

I see what you are getting at and I agree, but I think you may have got your figures a bit wrong. I am pretty sure gas and electric for homes is taxed at 5% not 17.5%

But don't forget the profits these companies make. They will be paying tax on those as well.

Last edited by symon; 30-07-08 at 16:54.
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(Post Link) post #3 of 6 Old 30-07-08 Thread Starter
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Re: Another stealth tax?

Quite correct Symonh (a temporary mental lapse - at least I hope it's temporary), but it would still mean well over 100 million in the coffers, and as you point out, tax on the profits as well.
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Re: Another stealth tax?

The only other thing to consider here is that people only have a finite amount of money. If they really can't afford the increase in price they will either
a) use less gas/leccy
or
b) spend less money elsewhere

Both cases result in less VAT going back to the government, not more. Especially if they spend less on 17.5% rate goods/services. Even if the money is coming out of disposable income that would be saved then there is income tax to be paid on any interest earned.

They always get their money somehow unless you spend it abroad!
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Re: Another stealth tax?

Quote:
Originally Posted by bigmacnchips View Post

They always get their money somehow unless you spend it abroad!

very true...

The only certain things in life are death and taxes.


They will be paying a lot more out in dole money though if things continue.
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Re: Another stealth tax?

We shouldn't pay any VAT on fuel. It's a necessary item
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