Sunday 23 November 2008

GST Exemptions - The Spectre of Complications

I have been reading Sean Power's election pamphlet in which he says he is against the idea of GST, but now that it is here, should be given time to settle down, and exemptions would create a bureaucratic VAT style UK nightmare. Notoriously, the case of the Jaffa cake illustrates this. Chocolate covered biscuits are a luxury and subject to VAT at 17.5%, but the manufacturers argued that Jaffa cakes were not biscuits but cakes, and therefore exempt!

I can see where he is coming from with regard to food, where the UK is notorious for some foodstuffs being charged VAT and some not. But what about heating and lighting expenses? The chain of supply is very limited here - electricity, gas, coal, domestic heating oil. Is it really so difficult to identify those and exclude them? And what about school uniform? As anyone with young children at school will tell you, school uniform is precisely defined by the school, and such a readily identified item again could easily be excluded. GST would still remain pretty simple if excluded from these.

So I am not convinced with this "spectre of complications" argument, which seems to look to the UK for the most complicated set up, and then assume that it would have to apply to every kind of exemption proposed. It doesn't, and I hope Deputy Power thinks again on this matter. With electricity costs threatened to rise by 25%, and a global recession on us, I am not sure we can afford to elect politicians who cannot allow any exemptions because of some rigid dogmatic stance. To those who go on about the need to "keep it simple", I would say to look at the global picture, look at proposals to lower VAT rates in the UK to help out, and don't behave like simpletons!

1 comment:

Nick Palmer said...

Yup, I suspect this argument that it would be too complicated and/or expensive to have exemptions is just a piece of spin. In any event, the word from the many parishioners I have met, while "door knocking" on my campaign to be a Deputy for St Lawrence, is that the overwhelming majority I spoke to want these exemptions.

This is the democratic voice of the people who are worried that the rate chargeable will increase to maybe 10% plus. It is up to the civil servants to work out another method of raising that revenue that currently is raised on basic living costs such as food, heating, children's clothes and shoes.