Solidarity launched last night and our journalists set off to work analysing their manifesto. One policy that stood out in particular was:
“We will gradually reduce VAT and increase LVT, with the aim of abolishing VAT all together.”
In the last budegt VAT raked in £122bn into the treasury, with Solidarity claiming they will plug the hole in the public finances after it’s abolition with a LVT hike. The consequence would be a rise in LVT to 133%, but what would this mean for families?
The most striking injustice caused by this would be the extra state-sponsored yearly premium of living near a good school place. Department for Education figures show that living near a “good” (not even outstanding) primary school will on verage increase house prices by £18,600.
Under Solidarity’s proposed LVT rise to 133%, families would have to pay a yearly LVT fee of £866 to live near a “good school”. Over the course of a child’s school education of 14 years, that figure rises to an eye watering £12,122 ontop of the extra £18,600 the family had paid for on their home.
One Conservative MP called it a “bizarre proposition” given that the party also claims to want to deliver “free education” for “everyone”. A spokesperson for Soldairity pointed to tax relief on offer as well as the Catchment Area Reform Act. They said “We don’t see a strong ‘pricing out’ effect being likely”, despite the Catchment Area Reform Act not abolishing catchment areas at all.
Crime would also be an exacerbated factor. Studies show that just a 10% reduction in criminal damage near a home can increase the house price by £5,640, translating to approximately £262 a year in LVT to central government.
The newly formed party has been criticised for laying this LVT rise primarily on working class people, while they slash luxury items such as luxury limosines and private helicopters to 0% VAT. In what signalled a change of direction on VAT abolition a spokesperson for Solidarity said:
“Solidarity believes that removing VAT entirely on all goods is worthwhile. We are working on plans for a luxury excise to ensure that [luxury items] will not be left untaxed.“
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