Now Tories want to slap VAT on food and children’s clothes and hike tax on energy bills

Influential Conservative think-tank wants a 15% sales tax on ALL purchases including essentials currently exempt from VAT

Taxing times: Parents could be the hardest hit by the Tory proposals

Leading Tories exposed their true colours yesterday by launching a plan to slap 15% VAT on essentials, including food and children’s clothes.

The Free Enterprise Group – which lists Treasury Minister Sajid Javid among its members – also recommends tripling the tax on heating bills.

The right-wing plan was unveiled by Old Etonian Kwasi Kwarteng, spokesman for the influential group of ministers and MPs.

They want to end both VAT exemptions and the reduced rate on essential items.

These would be abolished along with the existing standard 20% rate and replaced with a 15% charge on all purchases.

Chancellor George Osborne is being pressured to adopt the move in the Autumn Statement on the economy next month.

The highly controversial recommendation comes as the rate of food price rises is already leaping ahead of pay increases.

And as the most vulnerable are being forced to chose between heating and eating – causing a sharp rise in malnutrition cases – the callous proposal will be seen as one more case of the Tories looking after its voters at the expense of the poor.

Britain would be hammered by steep prices rises for “zero rated” items, including prescriptions, bus and train fares, most food – and children’s clothes and shoes.

There would also be big increases in electricity, gas, car seats, mobility aids and other products on the reduced 5% rate.

A weekly grocery bill of £54.80 would go up by £8.22, an outing for £251.10 worth of under 14s clothes would jump £37.66 and a fuel bill of £1,267 would rise £127.

Labour MP Phil Wilson added: “This shocking proposal to increase the price of food and children’s clothes by 15% shows the true face of David Cameron’s Conservatives.

"At a time when families face a cost-of-living crisis, you have to be spectacularly out of touch to suggest VAT on food and children’s clothes.”

Less well-off families would be hit hardest because they spend a larger proportion on food and goods not currently charged at the full rate, say experts.

Mr Kwarteng admitted: “This is controversial because it would mean abolishing zero-rated VAT. But having one VAT base, actually, would be very clear. It would be very easy to understand.

“In the round, consumers would benefit greatly because most items are paying the top rate of VAT and if you were to reduce that to 15% it would be revenue neutral.”

But experts dispute this claim that the Taxman would not end up out of pocket and short on revenue.

Fellow Free Enterprise Group member Brooks Newmark admitted the VAT proposal was politically “toxic”. It stands little chance of being included in George Osborne’s statement on December 5.

But Lib Dem MP Lorley Burt, parliamentary aide to Chief Treasury Secretary Danny Alexander, said it exposed the differences with her party.

She said: “I’m shocked some Conservatives want to hit families with a massive tax hike on food and children’s clothing.”

Other Free Enterprise Group members include Matthew Hancock, a George Osborne ally, and Nadhim Zahawi, the PM’s business adviser who charged taxpayers for electricity at his stables.

Other proposals include: Abolishing green taxes and air passenger duty, and stamp duty on land for properties under £500,000 to boost “the aspiring classes”.

Another idea, to ditch employers’ National Insurance contributions when hiring jobless under 25s, would run with a three-year freeze in business rates.

The group also wants to dangle an unrealistic election bribe to raise basic rate income tax limits from £32,010 to £40,000 at a staggering £5billion a year cost.

Meanwhile, a doubling of people treated for malnutrition in areas hard-hit by austerity was blamed on Tory cuts.

Almost 400 have been admitted to hospital in some areas of the North compared to 197 cases in 2008. Easington MP Grahame Morris, of the Commons health committee, said “cuts to services and welfare benefits were contributory factors” and the figures should act as a Government alarm call.

Poor suffer, rich gain

Analysis by Tony Dolphin, Chief Economist at the Institute for Public Policy Research

This proposal would have substantial and unwelcome effects on relative living standards.
People on low incomes spend a much bigger proportion of weekly outgoings on goods and services that are zero-rated for VAT.

In particular, they spend proportionately more on food, beverages, gas and electricity.

Moving to a single VAT rate of 15% would leave them worse off, while those at the top of the income tree stand to gain. Most economists would argue that a move to a single rate of VAT should only be considered if benefits and tax credits are increased to prevent those on lower incomes losing out.

In order to be revenue-neutral, a rate of VAT higher than 15% would be required.

And Tories want prescriptions to go up by 27 PER CENT to £10

PA

Prescription  charges should rise by 27% from £7.85 to £10, a think-tank linked to Prime Minister David Cameron will demand today.

Reform also wants to strip OAPs of free medicine and charge for GP visits and overnight hospital stays.

Its plans to milk £3billion a year from the ill and vulnerable come months after Reform deputy director Nick Seddon quit to become the PM’s health adviser.

Reform says: “Prescription charges are the easiest route to new revenue, with exemptions for people on low incomes.”

Shadow Health Minister Jamie Reed said: “Prescriptions have been creeping closer to £10, adding to the cost of living crisis. The Government must come clean on plans to charge for NHS care.”

Mirror