March 31st 1973

“At work, changed all sweets to VAT prices. BackWard sed I could work tomorrow as well”

VAT (Value Added Tax) was introduced in 1973 – as a condition of Great Britain’s impending membership of the EEC (European Economic Community) – as a replacement for both Purchase Tax, a tax which had been in force since 1940.

Purchase tax was the main indirect tax of its day, imposed on the wholesale prices of a wide range of goods, mainly ‘specialist’ items. (The definition included things like washing machines, fencing and refrigerators, along with other items considered necessities these days!)

Naturally, the tax mandarins at customs & excise did not want things to be simple for retailers and companies trading across the country, so VAT was brought in at three different rates; A 0% rate for basic food items and necessary household goods, 12½% for so-called ‘luxury’ goods, and 8% on almost every other good or service.

It is the European equivalent of USA’s Sales Tax, but unlike the retarded American version the tax value is passed on via the selling price, rather than tacked on afterwards. (Something which – even after over a decade of living here – feels like some kind of bait and switch charge) American visitors to the UK often (conveniently) forget this important difference when comparing the cost of something from one side of the Atlantic to the other.

My job at Lancaster & Crook’s today was repricing all the sweets (candy) to include the new 12½% rate, something which doubtless added a penny or two to the price of every bar.

I wonder if my pricing activities included repricing the tastiest – and most-missed – Cadbury’s chocolate bar ever? The Aztec bar. As my addled memory recalls it was part-milk/part-dark chocolate covering a crunchy nougat interior laden with peanuts and raisins. Of course my mind may just be racing there and I could have included ingredients that didn’t exist at all but merely represents a wish-list?! The positive memory is that it really was the chippity-chomp. Cadbury’s obviously withdrew it somewhen as I never see it anymore and Cadbury’s website fails to mention it. (Bugger, I wish I’d never looked at the Cadbury’s site – am hungry now!)

VAT was eventually raised – doing away with the 3-tier system – to a flat-rate 15% in 1979, where it remained until 1991 when it went up to 17½%. To try and stimulate the economy, the government reduced the rate back down to 15% for a 13-month period from December 2008. Needless to say, this minor shift has made very little difference indeed and, instead of making much difference to people’s spending habits, it is expected to cost the treasury over £12-billion before the reduction expires.

I think America should do away with state sales taxes and instead introduce a one-rate inclusive federal tax like VAT. It would stop people from having to calculate the total cost of the potential purchases in stores, cut out a whole crapload of bureaucracy, and better balance the inequality of the current state system. Given that the rate could be 2½-5% higher than any existing sales tax level, the upturn in revenue could be used to pay for a universal healthcare system so that everyone would have access to doctors, specialists, hospitals and care.

That’s perhaps my Utopian States of America?!


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Filed under 1973 Diary Entries

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