Shopping receipts to expose stealth taxes
SHOPPERS are to be told how much of the price they pay for goods goes on taxes under a scheme launched by businesses to expose stealth increases.
In a protest led by Michael Van Clarke, a hair stylist to Diana, Princess of Wales, companies are starting to itemise receipts to highlight how an array of levies pushes up prices.
The scheme shows that up to half of what customers pay at the till is made up of tax. At present Vat is the only tax routinely highlighted on receipts, even though it accounts for a fraction of what actually ends up in the Treasury coffers.
The government has introduced dozens of taxes in the past decade, with the total tax take soaring by £215 billion since Labour came to power in 1997. It now stands at an estimated £530.7 billion, compared with £315.7 billion in 1997.
Among the taxes that shoppers may not realise they are subsidising are business rates, climate levies, landfill charges and National Insurance.
Full tax receipting could eventually become standard policy. The idea has won the backing of a number of Conservative MPs.
Van Clarke introduced the new type of receipt at his London salon after spending just a few hundred pounds on the software necessary to re-programme his tills.
The calculations are based on his latest annual company accounts and show that a typical £374 bill for a cut and blow dry, full head of highlights and luxury hair treatments at his exclusive salon is about 50% tax.
Van Clarke, who says his clients include the models Eva Herzigova and Naomi Campbell, and formerly included the Blairs and Peter Mandelson, said: “People just don’t understand how much tax they are actually paying; it’s at least twice what they think.
“In most businesses, about half of your bill is made up of various taxes and I think there should be far more awareness of that.
“We have a high-value clientele — movers and shakers from all walks of life — and they have no idea of the amazing amount of tax that is built into their bills. There has been a very positive reaction from our clients, who now see that what we are charging is not as expensive as it seems.”
The actual number of stealth taxes is impossible to measure because the definition varies, but one measure is the size of Tolley’s Yellow Tax Handbook. In 1997 it stood at 4,998 pages in two volumes, while the 2008 edition has 10,134 pages in four volumes. It would have been 10,900 pages but for the publisher changing the layout to fit more data on each page to try to reduce production costs.
Van Clarke says he has been contacted by a number of utility companies and rival hair salons keen to adopt full tax receipting.
Among firms preparing to introduce the system is Avanta, which supplies serviced offices and meeting rooms in London’s West End. It intends to introduce the system in protest at soaring business rates in the capital.
David Alberto, Avanta’s chief executive, said: “Our business rates are going up by 70% in the next three or four years. It is incredible. It pushes the cost of office space up from £20 per square foot to something like £35. We are going to have no choice but to pass some of the extra cost on to customers.
“We already have online billing, so altering our systems to show customers the enormous amount of tax we have to pay should be a doddle.”
British Gas has started providing customers with more information about how bills can be broken down into the wholesale costs and taxes.
However, while Vat is a uniform 15%, critics point out that the amount paid by companies in other levies, such as corporation tax, depends on their profits, making accurate calculations on receipts difficult.
Phil Hammond, shadow chief secretary to the Treasury, said: “It is a good idea to give people a clearer understanding of the scale of the tax burden. People would be surprised that supermarket profits, for example, are only about 2%-3% after tax and operational costs. But there needs to be a standard format.”
According to research based on official government figures, the average household in Britain pays £668,000 in direct and indirect tax over a person’s lifetime.
The four heaviest taxes over a lifetime are income tax, Vat, National Insurance contributions and council tax. Average taxpayers have to work almost half the year — 176 days — to pay their share of the cost of Gordon Brown’s administration.
The Institute for Fiscal Studies has identified more than 200 tax rises since Labour came to power. Alistair Darling, the chancellor, admitted yesterday that the government needed to “level” with voters about the state of Britain’s finances.
Nobby Clark wrote: Don't worry, Alistair, we are all going to "level" with you in May next year. We are going to level your cushy job, cushy home and cushy lifestyle. Welcome to to the world you created. |
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