People in the bottom fifth of the income stream who drink moderately, smoke and drive a car spend 37% of their disposable household income on sin taxes and VAT. The comparable figure for people in the top fifth of the income stream is 15%
Halving "sin taxes" on fuel, tobacco and alcohol, scrapping green energy subsidies and returning the rate of VAT to 15% would reduce tax evasion, reduce black market activity, improve labour market flexibility and stimulate the economy. Above all it would put money back in the pockets of those who are in greatest need of it.
"Which" magazine estimates that "green taxes" add £185 to the average household's annual £1,247 energy bill.
Virtually no other country in the EU has such high taxes on alcohol, tobacco, and fuel. Halving tobacco duty would bring it close to the EU average and lowering VAT to 15% would bring it to a level that was the norm between 1979 and 1991. Halving motor fuel duty would make it about the same price it was in Britain ten years ago.
"Aggressively Regressive" by Institute of Economic affairs
