Cable warns independent Scotland will have expensive food and children's clothes
Who said politicians were scaremongerers? Not Vince Cable that’s for sure. Speaking in Glasgow yesterday, the Business Secretary refused to stoop so low when (presumably) canvassing for a No vote in a Scottish independence referendum.
What Cable did do, according to Scottish paper The Daily Record, is merely to warn Scots, out of a touching concern for their pockets, that if they chose to vote Yes, they could end up paying more for children’s clothes and food than if Scotland chose to remain within the comforting arms of the rest of the UK.
Not wanting to be seen “fishing for a headline that says ‘Alex Salmond will impose a new tax on children’s clothes’”, Mr Cable also threatened roaming charges on mobile phones, international stamp costs and increased costs for Scottish hauliers in a report he described as “positive and optimistic in tone”.
But does he have a point? Not that Alex Salmond is going to prioritise a school uniform tax, but there is an underlying issue to do with VAT. Children’s clothes and staple food items are zero-rated for VAT purposes in the UK, meaning the VAT on them is charged at a pocket-friendly 0%. However, under EU law, which governs VAT throughout the Union, the UK’s zero rate is actually not allowed, as countries are supposed to have just two rates, a standard rate (generally around 20%) and a lower rate for concessionary items. The UK zero-rating is only still here because it has been around so long, and the EU have so far turned a blind (ish) eye.
If Scotland were to become independent, it would need its own Revenue authority, and its own VAT rules, and as a new member, it may not be able to implement an outdated, non-sanctioned zero-rate. The implication is, therefore, that things like children’s clothes and food could, at best, be reduced rated, which assuming a 5% reduced rate, would make these things 5% more expensive.
The Daily Record produced a handy school uniform graphic (above) showing the extra 5% that could possibly in the middle distance future be levied on poor Scottish parents. We just want to know where they got school shoes for £10 from…