A COUNCILLOR says the move to raise VAT from 17.5 per cent to 20 per cent is already having a damaging effect on jobs, families and pensioners in Hartlepool.
Less than a month after the 2.5 per cent rise was introduced by Chancellor George Osborne, Councillor Chris Simmons, leader of the Hartlepool Labour Group, has hit out claiming the “regressive” tax is hitting those most in need.
The Treasury says the VAT rise, which came into effect on January 4, will bring in an extra £13bn a year in revenue.
Food, children’s clothing, newspapers and magazines are not subject to VAT and the government said the move was “unavoidable” if they are to deal with the national debt.
But Coun Simmons believes the rise is hitting those on the lowest incomes harder than most.
He said: “VAT is a regressive tax, it hurts those most in need, it costs jobs and it is fundamentally unfair on residents here in Hartlepool.”
The Grange ward councillor said evidence from the Chartered Institute of Personnel and Development (CIPD) shows that the VAT rise will cost a pensioner couple £275 a year more on average, a couple with children £450 a year more, a one-parent family £225 more a year and a single pensioner £125 a year more on average.
A spokesman for the HM Treasury said: “The government’s overriding priority is to reduce the deficit in a fair and decisive way.
“At the June budget the Chancellor announced that on January 4 the main rate of VAT will rise to 20 percent.
“This single measure will generate over £13bn a year of extra revenue by the end of this parliament.
“Everyday essentials such as food and children’s clothing, as well as other zero-rated items like newspapers and printed books, will remain exempt from VAT.
“The VAT rise is unavoidable if the Government is to act to address years of accumulated debt and overspending.”
It is the second increase in a year after Labour chancellor Alistair Darling restored the 17.5 per cent rate last January, having temporarily reduced it to 15 per cent for 13 months to stimulate the economy.