United kingdom Daily news: Why are British consumers suffering so much? It's the Government stupid

Minggu, 10 Juni 2012

Why are British consumers suffering so much? It's the Government stupid

Why are British consumers suffering so much? It's the Government stupid

By Dan Atkinson

PUBLISHED: 15:25 EST, 9 June 2012 | UPDATED: 05:03 EST, 10 June 2012

For hard-pressed Middle Britain, the latest supermarket price war has started not a moment too soon.

Stagnant earnings growth has combined with an ever-increasing burden of VAT, income tax and other Government-related charges to put heavy downward pressure on living standards, as is expected to be confirmed by official figures later this month.

In 2011, wages and salaries increased by 2.1 per cent, while taxes on income and wealth rose by 3.6 per cent. Not surprisingly, household disposable income after taxes and inflation fell by 1.2 per cent.

Energy spending: The UK has the lowest average domestic gas bills of any EU country, according to official European Union data

A broader look at taxes of all types tells the same story. The official Tax and Price Index (TPI) measures the effect of both tax and inflation. So if a Chancellor cut taxes significantly, the TPI could fall even if prices were rising.

The same is true in reverse. In 2011, the Consumer Prices Index (CPI) rose 4.5 per cent, while the TPI jumped by 5.1 per cent.

More recent figures underline the effect of taxes on household finances.

The official Consumer Prices Index - Constant Taxes measure (CPI-CT) calculates what inflation would be were taxes to have stayed the same rather than gone up. In the year to April, CPI-CT rose by 2.8 per cent, against three per cent for the CPI.

One stark illustration of ministerially mandated higher prices comes from the major household budget item of energy.

According to official European Union statistics, Britain has the lowest average domestic gas bills of any EU country and among the lowest electricity bills.

The average total household energy bill in last year was Â£1,022.

Last month Centrica, parent company of British Gas, said rising non-commodity costs would add about Â£50 to the average dual fuel bill this year, Â£40 of which will be caused by higher transport and distribution charges (which are Government regulated) and by Government-mandated energy-efficiency measures.

The remaining Â£10 comprises State-related items, such as metering costs.

On June 26, the Office for National Statistics will publish figures showing the effects of taxes and benefits on household income.

These are expected to confirm that taxes on the middle classes have risen, while they benefit less than lower-income families from welfare and other Government spending.