Cable warns independent Scotland will have expensive food and children's clothes

3 July 2013

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”.

picture from The Daily Record
picture from The Daily Record

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it would need its own Revenue authority, and its own VAT rules, and as a new member, it may not be able to implement an outdated, non-sanctioned zero-rate.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…

TOPICS:   Economy   Travel   Government

13 comments

  • HW
    Scotland would have to join the EU, which it may not decide to do... therefore it can make up its own rules on tax etc...
  • John
    How ridiculous - tax on school clothes. What next - tax on the air you breathe?
  • HW
    The Irish are a part of the EU, and yet they have a 0% tax rate for things like childrens clothes... so not just the UK having the blind eye turned from them.
  • Cheesey
    If the Scots want independence then let them have it as long as the terms of separation are fair to both parties. If they make good fiscal practice and their economy soars then good luck to them. If their economy bombs and taxes and the cost of living rises horrificly then tough shit.
  • Big D.
    Quite frankly, Scottish independence sounds like a bit of an arseache that's got a lot of sorting out. Its probably not worth the effort.
  • Steve
    The "Yes" campaign isn't doing enough to get people to vote for independence, but the "No" campaign is certainly coming out with enough pish for folk to NOT vote No!
  • fibbingarchie
    Children's clothing is the least of our worries, in fact we'd probably need to send the kids underground to dig for gas 'cos we've not much oil left. Not to mention half the country is either on benefits or employed by the council. Or our share of the national debt we'd need to shoulder if we go it alone. We can't even decide what currency we'd use ffs!!
  • doober
    Cable says they'll pay more for calls. What about the EU dropping roaming charges? Cable and his kind will spin any old shit to suit their needs.
  • Kevin
    Doober, that is IF they are in the EU. Thing is if they want the benefits of the EU (which they do), things will be on the same basis as other countries joining such as Croatia which will cost more than now. If they don't want to be part of the EU there are other costs and lack of certain monies that would need to be compensated for. Not that it's necessarily going to be a massive cost but it's something that needs to be recognised. Look at the picture, it's not a huge difference.
  • tiderium
    the no campaign with "project fear" real name given by one of there advisor's to get people to vote no keep coming up with more and more ridiculous nonsense to scare the Scottish people into voting no. telling us that there's hardly any oil in the north sea one month then the next dave cameron tells us that north sea is the glittering prize in the uk crown. well which is it. also if scotland is so full of scroungers, alcoholics and losers why is the uk government so keen to keep a hold of us?
  • jt
    It will do nothing to help the capital letter shortage either.
  • digibanger
    How's this for reverse logic. Give England Their Independence. You have a great parliament - make this the English Parliament only, why there is still Scottish mps there baffles me - they are only there (as all politicians are) for themselves be it for the money, lifestyle or prestige - just another layer of bureaucracy. Why anyone English is against Scottish Independence - surely that means more Independence for England? Fly you St Georges with pride. (PS if you didn't know this the Scottish Parliament cost £420,000,000 to build - the initial costs was expected to be £42,000,000 - they went over budget by 368 million pounds!!!! First three months of business - debating their own pay! Were getting 36k a year - but London Mps were getting £48k a year - so gave themselves a pay rise of £12k pa in three months!) Second First Minister was ousted for renting out space in his paid for offices and pocketing the cash! I am for Independence despite all this - but English people - you should be happy to let us go!
  • digibanger
    correction 378 million over budget - forgot the 10 million for the tp

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