By Isle of Wight Observer
The government introduced VAT on April 1, 1973, at 10 per cent. More fool you if you thought they would leave it at that. Realising the economy was floundering, a year later Dennis “Eyebrows” Healey cut it to 8 per cent. Evidently, the jovial old duffer was not the “silly billy” Mike Yarwood suggested.
The ’70s were the glory days of television. We only had three channels to watch and no subscriptions. If a TV detector van ever stopped by, I plan to invite them in, throw them our four remotes and say: “If you can find the BBC using that lot, I’ll happily give you the licence fee.”
These days, if it’s not on YouTube, I don’t see it. I’m not subscribed to any of those subscription channels, but younger family members are. I can’t shake the feeling that those – and excessive flat whites and cappuccinos – could explain why the young are always broke.
Chancellor, Sir Geoffrey Howe, who later became famous for his “dead sheep” attack on Maggie, raised VAT to 15 per cent in his first Budget, with a 25 per cent rate for luxury goods. He also cut income tax.
In those days, cash was still king. Now, virtually all transactions are by card or digital payment. Technology killed the black economy. The Arthur Daley geezers of my childhood, the men who always carried wads of readies, have gone legit.
Reducing income tax and raising VAT made a lot of sense then, because characters like Arthur or Del Boy couldn’t easily avoid VAT when they spent their ill-gotten gains.
After the poll tax debacle in 1991, Norman Lamont increased VAT to 17.5 per cent. I wonder how much your council tax has increased since that bold move was supposed to resolve local authority funding forever?
I was running my own business by then and enduring a full-blown recession. I had a mortgage and interest rates jumped to 15 per cent. We were barely managing to pay it and, when they peaked, I stopped for three months. Impatiently, the Coventry Building Society tried to repossess my house.
I went to court and got a stay of execution, or a “suspended possession order”. Thankfully, we did keep our home, on condition that I resumed paying the mortgage and cleared the arrears quickly. With a struggling business and a terrible recession, it was quite a challenge.
Thankfully, I survived and emerged with greater respect for money. I also learned about cash flow and that overdrafts couldn’t be taken for granted. Several times the bank tried to remove ours; several times I persuaded them we needed it.
From memory, our business borrowing represented about two weeks’ turnover. Later, our sales were well into the millions. Still, they only ever let us have that £15,000 overdraft.
I’ll forever hold banks in contempt and always delight in any windfall taxes imposed on them. Like the oil companies, I don’t believe a word when they claim not to be making obscene profits from the men and women in the street.
Alistair Darling cut VAT back to 15 per cent during the next financial crisis, but only for a year. George Osborne kept it at Darling’s reintroduced 20 per cent, and it has stayed there ever since.
Twenty per cent is a terribly damaging rate, especially when every other tax has been increased and several new ones imposed. In my lifetime, every single government has spent more and more of our money. More fool us for letting them.
One way or another, businesses now hand over up to 50 per cent of their sales or turnover to national and local government in taxes. That cost is passed straight on to working people and pensioners through higher prices.