Food VAT threatens families with debt

Households could be facing sharply increased food bills, if secret plans to impose VAT on food get the go ahead.

According to the Sunday Telegraph, civil servants and the food industry are discussing plans to charge VAT on food at a rate of between three and five per cent.

While that is much lower than the basic rate of VAT, which stands at 17.5 per cent, food is currently exempt. Charging VAT on food would sharply increase the cost of living for many poorer families, worsening financial problems for those who can least afford it.

A spokesperson for the Treasury told the newspaper that the government has no plans to charge VAT on food.

A charge could raise billions of pounds for the cash-strapped Treasury, but it would be extremely unpopular – particularly at a time when numbers out of work are rising, personal debt is at such high levels and when food prices are already historically high.

Atlantic director Vance Parsons says: "Stealth taxes and rising costs generally will put households finances under severe pressure if you are already struggling with debt problems. Rising credit card debt and the costs of interest on these accounts is a problem, especially if people feel they have to purchase groceries on credit cards to make ends meet."

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