Sunday, 9 January 2011

VAT's It All About ?

As often happens, though not for those with birthdays mid-month, the first week of January is often deeply depressing for many people. After a couple of weeks of indolence at worst or doing what you want at best, it's back to "normal" be that work, school or whatever.

It's also a time when we tend to get a sharp slap in the face from the cold fish of reality. The increase in VAT to 20%, combined with a 1p rise in petrol duty to propel fuel prices to record levels - up to 126.9p per litre at my local Tesco's. Of course, taking inflation into account, petrol has cost much more in the past but the prospect of £1.50 a litre cannot now be discounted and while the queues at the petrol station this afternoon looked as long as ever, there is some slight evidence that there is a slight falloff in car driving starting.

For those of us who use public transport, however, it's been an equally difficult week with sharp rises in rail, tube and bus fares and this gas brought the Labour Party in East Ham back to life with a leaflet issued on Friday evening expressly blaming Boris Johnson and George Osborne for the higher fares.

I resisted an Oyster card for a long time but it's now very difficult to get around London without one. They work by the cardholder "touching in and out" using pads at the beginning and end of each journey. Transport for London have always warned you that you will be charged full fare if you don't touch out BUT they don't make it easy with some exit terminals not well placed or sometimes defective. All this means TFL are raking in £67 million in excess fares from Londoners and others and that's nice work if you can get it.

The message of this week seems to be that people aren't happy which is understandable but they will accept tax and fare increases if they are applied fairly and sensibly. It's the apparent unfairness of huge bank bonuses or "stealth" taxes such as excess fares that angers so many and rightly so.

David Cameron once claimed "we are all in this together". Fair enough but in the bleak midwinter it isn't just a question of applying fairness and equity but also of providing some sense that this will all be worthwhile for just as that which keeps winter tolerable is the certainty of spring and summer the Coalition can't just be about short-term pain and misery - Cameron, Clegg and the whole Government also have to emphasise the positive aspects of paying down the deficit, getting the public finances back under control and restoring economic growth.

They need to start accentuating the positives and not just revelling in the negatives.

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