Indirect Taxes

All transactional taxes will be left as they are under the Transformation Deal, with the exception of VAT. This will be reduced from 20% to just 12.5% for all goods and services EXCEPT those goods which damage the environment and/or the wellbeing of our fellow citizens*.

This will mean overall a tax cut for consumers and the businesses that supply them of around £26.5bn per year

Taxes remaining £bn
Tobacco duties 9.5
Spirits duties 3.0
Wine duties 3.8
Beer and cider duties 3.6
Customs Duties 3.0
Fuel duties** 30.5
Vehicle excise duties 5.9
VAT refunds 13.7
EU ETS Auction Receipts 0.3
Other taxes and royalties 5.5
Other*** 60.0
VAT (at 12.5% and 20% for those areas listed below* ) 83.5
Total 219

*Alcohol, tobacco, new car purchases, petrol and diesel
** Fuel duties will also include an extra 20p per litre on diesel
***Other is a catch-all for all other gov’t revenues as listed in the ONS accounts and is just lumped here for convenience

The list of goods and services that are detrimental to the environment and/or human health could easily be expanded and extra revenue derived from them should be used to reduce the VAT burden on other non-damaging goods/services.


There are current rules as laid out in various EU Directives about the levying of VAT.

If these plans contravene these rules, then they should be amended accordingly in a way that maintains the shift in the burden of taxation away from non-harmful goods, and towards harmful ones. This policy is a statement of intent and should be applied in the most practical way possible, even if that requires more legal complexity than we would like.