UK considers plans to cut VAT on household energy bills
https://www.ft.com/content/3a88e363-c231-4314-b2cb-e9896ef363ca
by topotaul
UK considers plans to cut VAT on household energy bills
https://www.ft.com/content/3a88e363-c231-4314-b2cb-e9896ef363ca
by topotaul
32 comments
Can we afford tax cuts? Will the end user see any benefit?
If my maths is correct, will people really notice the difference of 7 quid a month.
It doesn’t feel like it’s worth it really. Taking that VAT and ring fence it for those in fuel poverty would make more sense and would probably be a vote winner for the traditional labour crowd too.
Energy VAT is already set to 5%. What gov needs to do is change the way energy is priced. Wholesale energy pricing shouldn’t be the method used when the most expensive energy source is significantly more expensive than just about everything else.
We have the most expensive electricity in Europe. Maybe allowing our utility companies to be sold overseas wasn’t the smartest decision.
I think we’ve focused on those who don’t work enough. It’s time workers are afforded some good news for once like tax cuts
Tinkering once again. They need to change how energy pricing works. Setting it against gas which is the most expensive is a huge problem.
A tangible brexit benefit!
(We couldn’t do this while in the EU.)
I’ve often thought why energy standing charges don’t include a certain amount of energy ‘free’. This allows energy poor to still be able to use some energy while keeping standing charges for everyone else to account for the convenience of the grid.
General taxation:
ER NI upper limit 2->3%, additional rate 45->47%, personal allowance reduction removed reducing tax cliffs.
EE NI raised from 8% to 10% (previously 12% a year before election).
Pension contributions up to £30k fully tax deductible, afterwards 10% if on basic rate or 20% on higher and additional.
EE auto-enrolment contribution paused for 2 years (not ideal but an extra 5% in the pocket is going to be a big boost to consumer affordability and the ER amount would stay).
It’s not the VAT on energy that needs to be cut! They need to grow a backbone and force Ofgem to do a decent job or overrule them.
If the UK government cuts Vat to 0% from 5%, the power companies will just increase price by 5% as they know ppl can pay that because they are, then it will be impossible to put VAT up again without the media screaming “Labour cash grab”.
They need to find a way to reduce the companies profit margin and costs, without putting them out of business. The profit margins are already quite high, with too much dividend payouts driving the ever increasing household bills.
Would this not disproportionately be a tax cut for energy heavy users? I can see there being a good argument for removing vat from the standing charge, but use seems like it’ll benefit millionaires with their mansions more than the average person.
They need to take the tax off electricity and put it onto gas, this would help drive the decarbonisation of the energy sector.
Get. Rid. Of. Marginal. Cost. Pricing.
It’s that simple.
Everyone says it’s complicated, but it’s only complicated for the people and organizations who are systematically extracting money from the public at unprecedented rates for the benefit of their shareholders.
Frankly, they can poke off.
Yeah this is tinkering while we remain the cash cow of Europe.
See also: rail.
Real talk, what is actually stopping them capping energy prices and just telling firms to stop price gauging?
I was on a 100% renewable energy tariff, paying more for it. When I asked why I was being charged the wholesale price, I was told that because they can’t guarantee that the energy I revived was from renewable sources, I get charged the same. The whole thing is a con.
These itty little tweaks to broken systems ain’t it labour.
Won’t the energy companies just up their price with that?
I mean, it’s a positive step but seems like a way for energy companies to make more without the pricing structure being different.
It will make zero difference, you know why?
The price of energy will bump up to cover the 5% saving.
It’s an absolute disgrace
Oh for fuck sake just put a lower cap on their prices.
They’ll do *anything* other than hurt the record profits of big business.
If the government cuts down the VAT then all that will happen is the energy companies will increase their costs by the same percent the government cut it.
A different example is Universal Credit.
It is apparently going up by around £20 a month from April, so although it doesn’t affect companies you can bet that those companies will ensure their prices rise just as much.
Its called company greed.
Would the energy companies even pass that on? They are already charging whatever they can get away with. If vat comes off they can get away with charging 5% more.
Lower the cap if you really want to make bills cheaper.
Or they could legislate against us getting ripped off! Better yet, nationalise it so as we won’t get ripped off!
So we will be increasing income tax to pay to subsidise rich people burning a lot of energy in houses I could never afford?
Sounds standard for Labour…
The Miliband play book:
1) Promise to reduce bills
2) Spend lods of tax payer cash on increasing bills
3) Spend more tax payer cash on tax breaks or subsidies to “reduce” bills
Someone will pay for net zero. If it’s not through your bills, it will be through your taxes.
What we need to do is stop spending billions importing it
And drill we got billions of barrels we could use it’s insane net 0
They should also consider creating an investment vehicle for UK companies (like Ripple before they went bust) but for companies. The idea being UK firms, from SMEs to large firms can buy shares in energy projects. Then, they can offset their investment against some of their tax that year/subsequent years as a result.
Why?
1. You get UK firms investing money into UK renewable infrastructure.
2. It lowers company energy bills, which lowers prices of common goods and products for consumers. Makes standard of living better.
3. Companies will directly own part of an energy project, whilst mitigating some of their tax burden (double win).
4. Access to free renewable energy.
This is god awful news. The chancellor already has £20 – £30bn black hole from Labour back bencher rebellions, productivity downgrades and general incompetence. The two big leaks is the removal of the child benefit cap and this.
So it seems pretty obvious Labour are planning a considerable raid into working people’s pension contributions and want to “soften the blow” with more redistribution. That is the only way they could raise £30bn+ and not raise a main tax.
Ultimately what it means is working people paying more tax and non working household (pensioners & welfare claimants) paying less. The incidence of taxation will shift, but working people will be getting considerably poorer whilst the non-workers will be paying less tax.
Labour need to rethink their name, as the only group people they don’t represent is workers.
Stopgap type shi, price is still gonna go up making the tax cut redundant and well still have price issues, the tax is fine, the price isnt
Something that never gets mentioned and would be very easy to do is force companies to put people on fixed tariffs with no exit fees unless they want to opt out, and not the other way round.
It’s a shame how many people are on the Ofgem tariff when there are so many cheaper fixes available.
Plaster on the wound. We need to own our own generation assets and not get fisted based on wholesale prices we have no control over. There is no justification for it costing this much.
I think realistically it’s better to be honest that it’s unlikely that renewables will lower prices in the short term because we need to spend money that hasn’t been spent to get us in a good place.
But that will mean no crazy price bumps in the short term due to global issues and it will mean cheaper prices shown the line.
But while we’re investing heavily, businesses will need that return and incentive to go renewable. I can’t see costs coming down in the next 5 years as has been reported. But it’s still absolutely worth it to get us off fossil fuels and onto home produced renewable fuel relatively quickly.
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