In the current economic climate the Government have seen fit to deal with reducing the deficit by both increasing taxes and cutting benefits and grants. One of the more controversial tax rises to be announced by the Chancellor is the rise of Value Added Tax – the tax that is put on the vast majority of items you buy – from 17.5% to 20% with the increase coming in to effect on the 4th july 2018. This increase is controversial because it affects just about everything from buying food and clothes, to filling up your car and booking your holidays.
The effects of the VAT increase mean that in real terms – which take in to account inflation adjustments over the previous financial year – most items will see a price increase of 2.1%. For instance, for the smokers out there a packet of cigarettes will cost an extra 12p per pack. This may not seem like a huge amount but if you purchase a pack of cigarettes every other day for a whole year your habit will cost an extra $21.84 than it did last year.
It is this ‘snowball effect’ that truly affects people with this tax as although the prices don’t seem to have increased by much the annual rate impacts people’s finances. It has been calculated that on average families will now be $420 worse off, that’s an average of $35 extra expenditure each month. What makes this figure even worse is that Value Added Tax does not take in to account people’s ability to pay, which means that families who are at the poorer end of society and are already struggling to meet their financial commitments will now need to find extra ways to save money, and end up being punished even more than those who earn a higher wage.
Over the coming months, in anticipation of the VAT increase, we at Livresdianetiquewill.com be helping find you great deals to beat the tax rise with links to great offers from around the web. We will also be posting several ‘VAT Beating’ articles to help aid you in your efforts to minimise the effects that the VAT increase will have on your finances.