PAYING THE EUROPEAN UNION'S BLOOD MONEY

In the days of ‘Not the Nine O’Clock News’ on BBC2, Rowan Atkinson performed a sketch showing a drippy looking character walking along the road and instead of looking where he was going, he was looking to the camera. As he began to give a silly grin and a wave to the camera he walked slap bang into a lamp post. It’s one of those sketches, like the Del Boy sketch where he falls through the open flap on the bar, that has to been seen to catch the humour.

Sadly, there can be little humour in the fact the British public, just like Rowan Atkinson, is blithely walking towards a lamp post which has the words ‘Value Added Tax’ on it. From the day of writing this blog posting we have six weeks before we hit the lamp post and it is going to come as one hell of a shock.

V.A.T. as we all loathingly know it, is a nightmare tax for most businesses, especially small to medium sized establishments. Currently most businesses have to add 17.5% to the value of its goods and pass on to its customers, which if another company they claim it back then put V.A.T. on to the cost of its goods. This can go on for several transactions until; finally, the poor sod at the end of the line, i.e. the ordinary shopper, gets hit with the final V.A.T. bill which up until the 1st January 2011 is 17.5%. However, from that date this will rise to a very painful 20% or one fifth of the value of most things you will buy.

Just think about it and the impact it will have, one fifth of the total when you fill your car with petrol or diesel will be tax, in fact with fuel duty it will be one fifth of tax on a tax. Your clothes, beer and almost everything will be one fifth tax – this is going to be painful and extremely harmful, as pointed out in the Daily Telegraph and will hit many businesses, possibly putting them out of business.

It seems that this additional 2.5% tax will reduce economic growth by 0.3 per cent and reduces the chances of the economy rising. The Organisation for Economic Co-operation and Development has warned that the predicted growth forecast of 2.5 percent will fall to 1.7 percent due to the adverse effect of this EU imposed system of taxation.

Coming on top of the great financial disaster now sweeping Europe courtesy of the EU’s lunatic currency, the global downturn and the savage cuts that are heading this way, many people in the UK will find 2011 not the best of times and their purses and wallets looking financially anorexic. For anyone in business in these lean times, the last thing they need now is a VAT hike.


For this blogger this rapidly approaching disaster has very personal implications. It was during the very painful recession of the early nineties when I ran our small family business that we faced exactly the same situation. Selling high priced goods direct to the public meant we were the end of the chain and the additional 2.5% which took VAT from 15% to 17.5% was the worst possible thing the Chancellor at the time could have done – we were struggling to sell our products in a depressed market and an enforced Government price hike was something we needed like a hole in the head. It was due to this that started my long journey on the road to Euro-scepticism.

I wrote to the Chancellor and pointed out how damaging this VAT hike was and made the suggestion VAT should be reduced to the old rates of 8% or 10%, as they had been in earlier times. The reply came as a massive shock as I was told that the EU would not allow us to reduce VAT below 15%. This was the moment of awakening when I realised we had sacrificed our democracy to be in the EU as our elected representative in high offices of Government were not allowed to set taxes by foreigners we do not elect or have any control over. If, in the coming weeks many people go through the same experience as I did nearly twenty years ago, then the Eurosceptic movement and UKIP could be in for a large influx of newly awakened anti-EU campaigners, which will be the only good thing to come out of this tax hike.

When the inevitable day comes for us to leave the EU to its own destructive devices, then we will be able to get shot of this vile and burdensome tax, which creates nothing but a bureaucratic paper trail in its wake from all those companies who act as unpaid tax collectors, and of course a means of paying the EU its blood money.