Labour’s VAT attack Advertisement

Labour Party Poster 140509 It’s not nice to be triumphal but the newspapers have been enjoying themselves over the latest advertisement from The Labour Party. The Spectator on Friday reported that Labour has a long, hard slog to arrest the public’s loss of faith in its economic competence. The party’s latest advert hasn’t helped. It shows David Cameron and Nick Clegg as two peas-in-a-pod whose VAT hike has put £450 on the annual shopping bill. There’s one big problem with the advert: it makes its claim in front of a whole bunch of foods on which VAT is not payable. Basic food is subject at zero per cent. Even the chocolate-chip biscuits. There are some 24 products in the picture and 18 of them are VAT exempt: Fresh fruit and vegetables (peas, sweetcorn, mushrooms, tomatoes, peppers, broccoli, red onions, beans, red cabbage, carrots, grapes, apples) eggs: all zero-rated.  Even the chocolate chip biscuits are zero-rated.  Canned and preserved vegetables have the same VAT liability as their unprocessed equivalents.  So, which goods attract 20 per cent VAT? The three cleaning products, the cola, the lemonade and the beer. It doesn’t end there. Labour might be complaining about the VAT rise, but to pay an extra £450 as a result of the VAT increase, you’d need to be spending £21,000 on goods attracting VAT at the full rate – something that would mean you were in the top fifth of income earners – and likely to be spending £40,000 a year on goods and services The Sun’s editorial on Saturday describes the advertisement as a “schoolboy error (which) is the latest cheap shot in a shallow election campaign that doesn’t bear close scrutiny. And it’s highly embarrassing for leader Ed Milliband who just days ago claimed he was cleverer than David Cameron”.