Pleas to cut ‘sin’ taxes for poorest

“SIN” TAXES on alcohol and tobacco must be reduced to help the poorest cope with soaring living costs, a think-tank insists.

Other “stealth” payments such as VAT should also be lowered to help the least well-off make ends meet, it was said.

Abolishing green levies and making childcare more affordable have also been suggested to help families on low incomes.

The Institute of Economic Affairs said tackling stealth taxes could be an effective solution to helping families with rising living costs.

Sam Collins, senior adviser at the IEA, said: “The Government certainly needs to take action in order to cut these costs of living. Instead

‘Government needs

to take action’

of constantly playing catch-up with the benefits system, they should look at how the state increases the costs of living for people, and look at how this could be reduced.

“For example, while the removal of the Universal Credit uplift meant that the poorest were £1,040 worse off, the amount the average family in the poorest 20 per cent pays in ‘sin taxes’, such as on tobacco and alcohol, was £1,300.

“Once other indirect taxes such as VAT are included, the average low-income family is paying £2,500 in taxes – a third of their disposable income.

“An average [smoking and drinking] family pays £192 per annum in green levies, £891 in tobacco levies, £216 in alcohol duty and

£655 on fuel duty. If we were to abolish green levies and halve the rest, the average family would be £1,073 better off per year.”

Mr Collins said that the costs of childcare could also be an effective target.

He added: “A reasonably minor adjustment to the staff-to-pupil ratio, to bring it into line with many European countries and American states, could see the cost of childcare drop by as much as 20 per

cent.” With inflation at 5.1 per cent and predicted to peak at six per cent in the spring, and energy bills set to soar by up to 50 per cent, households across Britain will be squeezed for cash this year.

Council tax is also set to rise in April, National Insurance will be lifted by 1.25 per cent to pay for social care and the 12.5 per cent reduced VAT rate is set to end in March.

It comes as research by the

Centre for Social Justice found nearly a third of people had to borrow to cover the cost of Christmas, with the number seeking urgent debt advice increasing by 68 per cent last summer.

A Government spokesman said: “We recognise people are facing pressures with the cost of living, which is why we’re taking £4.2billion of decisive action to help.

“We’re providing extensive support to those on the lowest

incomes, including putting an average of £1,000 more per year into the pockets of working families on Universal Credit, increasing the minimum wage and helping with the cost of fuel bills.

“Our £500million Household Support Fund is also giving more help to the most vulnerable with essential costs this winter, and councils have been given an extra £65million to support low-income households.”