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IFS would increase average fuel bill by £154 a year - that’s an 11.9% increase

The average household fuel bill is more than £1,300 a year.

VAT at 5% is included in that: about £62 in all.

Now suppose that as the IFS suggests VAT is charged at 17.5% on domestic fuel. The VAT bill would increase to £217. The overall bill would increase to £1,454.

That’s an increase of 11.9%.

For a median family on disposable income of £22,700 that’s an increase of 0.7% to add to the 3.1% that the same family will suffer on its food costs as a result of the IFS proposal. That’s 3.8% inflation for this family, but the IFS says the inflation impact is just 0.35%.

How come?

Post a comment — Trackback URI RSS 2.0 feed for these comments This entry (permalink) was posted on Monday, August 4, 2008, at 11:25 am by Tax Research LLP. Filed in Economics, VAT.

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  1. Tax Research UK / Children’s clothes: the IFS wants to add more trhan £100 a year to the bill on 04-Aug-08 at 11:37 am

    [...] tips the cost of living impact for a median UK household over 4% if they have their way and introduce VAT at standard rate on all goods and services in the [...]

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