Health implications of putting value added tax on fuel

Abstract

The American senator Hubert Humphrey said, “The moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life - the sick, the needy, and the handicapped.” By such criteria, putting value added tax (VAT) on fuel is a bad measure. Almost three quarters of pensioners in Britain pay no income tax, yet virtually all pay VAT on their gas and electricity bills. Only if the government had added VAT to food or water could it have increased the tax burden for an equivalent number of households made up of elderly people. The tax burden is not evenly distributed.1 Although households with low incomes spend less on fuel than those with high incomes (spending on fuel being mainly related to the size of the place where you live), the proportion that they spend is substantially higher - 13% in the lowest fifth of income compared with 4% in the highest fifth of income. Households made up of single parents with children aged under 5 or single pensioners spend one sixth of their income on fuel. When households in …