Tax would hit poor the hardest

Click to follow
Indy Politics
IMPOSING value-added tax on food would hit the lowest income groups hardest, forcing them towards poorer diets and junk food. It could also accelerate one of the biggest changes in high street shopping in recent years - the growth of the discount store.

The poorest tenth of British households spend over a quarter of their income on food, compared with about 15 per cent for the richest tenth. For energy - also being considered for VAT - the difference is sharper: as a proportion of household spending, the poorest tenth spends four times as much as the richest tenth.

The National Consumer Council is among groups which argue that there is a growing and linked problem of poverty, poor nutrition and ill-health in Britain. It described VAT on food yesterday as a regressive tax, imposing 'the heaviest burdens on people least able to afford them'.

The NCC says that families faced with the 'sheer impossibility' of paying for essentials out of state benefits are filling up with sugary foods such as sweets, biscuits and crisps. Two custard cream biscuits costing 3p will provide the same amount of energy as three small apples at 28p.

In most cases this is not due to ignorance but lack of money, lack of access to cheap food shops and, sometimes, not having a cooker or a refrigerator. The richest fifth eats 20 per cent more green vegetables, 70 per cent more fresh fruit and 400 per cent more fruit juice than the poorest fifth.

Suzi Leather, a member of the Ministry of Agriculture's consumer panel, said that introducing VAT on food would be an 'absolute disaster' for the poor. People now eating fruit 'once or twice a month' would not eat it at all.

The ministry has produced a diet which is claimed to show how people can eat healthily on pounds 10 each a week. Consumer groups dispute its relevance - it features five slices of dry bread a day and an egg a fortnight, for example.

Ms Leather said National Food Survey figures showed several groups in the lowest social classes were existing on pounds 6- pounds 7 a week and many single-parent households were reduced to pounds 5 a week.

The Government acknowledges that relief would have to go to low- income families if food were subject to VAT. The Child Poverty Action Group says this would miss many of those affected. The lowest-paid would not benefit from increased income tax allowances and many of those eligible for benefits do not claim them: 40 per cent claim family credit and 25 per cent income support.

Dearer food will accelerate the rise of discount shopping from stores such as KwikSave, Food Giant, Aldi, Netto and Carrefour - the last three European- owned. Specialists argue that Britain's supermarkets have not passed on manufacturers' price cuts to shoppers: the net profits of UK chains are higher than their Continental counterparts.