Rishi's £200 loan is really a sneaky tax

[GreenLunchBox]

So you are not allowed to refuse this 'loan' and from April 2023 everybody's bill will go up by £40 a year regardless of if you received the £200 or not.

twitter.com/MartinSLewis/status/1489584984235065344?t=joBqwQ20p5VPx3EKYUT2tQ&s=19

Some scenarios:

1. A married couple receive the £200 now then split up. In their new houses they each pay back the £200 over the next five years. So it's actually COST the couple £200

2. 5 students in a house share receive the £200 between them (so receive £40 each). They all move out and then each get charged £200 separately over the next five years. Government gets £1000 when they were only given £200.

3. A young person living at home about to move out. They didn't receive the £200 as it went to their parents, but they have to pay an extra £200 on their bill over the next five years

When you scale this up the government are going to make an absolute bloody fortune from this - doubling or quadrupling their money in some cases whilst pretending to be the good guy.
What a racket they're running.

AIBU to say we need to stop this racket?

The more signatures on this the better

r.ippl.es/energy-prices/

I don't understand how they can do this.

If my bank rang me up and said ok, we're giving you a loan. The repayment terms are....
You say I don't want a loan. I don't agree to a loan. They say tough, you're getting one and this is how you'll pay it back.

Isn't a loan a contract between two parties? Like an offer and acceptance thing?

I don't understand.

I wonder if it'll become a loan shark type situation where they keep adding exorbitant rates of interest to it so we're all perpetually in debt to the government and no matter how hard we try to pay it off, we're never able to 😱

Positively feudal if you ask me.

Even the New York Times can see how authoritarian Boris is being now

twitter.com/BobHopcraft/status/1490057222130479105?t=pc5MnwBqBtB6kyiq5lj3-A&s=19

‘Wondered when Clav would pop up with a nice bit of whataboutism 🤣’

Yes. haven’t seen JanieJones around for a bit though? Probably having some time off having had to work 24/7 last couple of weeks defending Boris over partygate.

UK VAT on domestic energy is only 5% - EU rules dictated that VAT on domestic energy could not fall below 5%.

Let's not forget that we used to have no VAT on fuel until the Conservatives introduced it at 8% in 1994. A year later they tried to put it up from 8% to 17.5% but couldn't get it through Parliament. Labour reduced it to 5% at the earliest opportunity.

EU law meant that once we'd charged VAT on it we were unable to zero-rate it again, so we were stuck with it at 5% until we left the EU. In fact one of the much-heralded benefits of leaving the EU was that we were free to zero-rate domestic fuel again.

We've left the EU now of course but we're still stuck with this unwelcome tax that the Conservatives introduced 28 years ago.

@DrManhattan

It's nuts and it sounds illegal. I don't want it so I should be able to opt out.

I agree.

I can't understand how this is even legal????

@IncompleteSenten

I don't understand how they can do this.

If my bank rang me up and said ok, we're giving you a loan. The repayment terms are....
You say I don't want a loan. I don't agree to a loan. They say tough, you're getting one and this is how you'll pay it back.

Isn't a loan a contract between two parties? Like an offer and acceptance thing?

I don't understand.

It isn’t a loan. And it’s completely absurd for them to describe it as such. The government is reducing every household’s electricity bill by £200 this year and then increasing every household’s bill by £40 for the following five years. They aren’t giving individuals £200 and then taking it back from them. If you die, or move abroad, you won’t be around to have a bill to have £40 added on to and it goes away. If you don’t get an electricity bill currently (because you live abroad, live with your parents etc), but move into your own household in a years time, you will have to pay the additional £40 on your bills.

So it’s not like a loan against you personally.

I wonder if they're going to add VAT onto the repayment? 🤔

Will Sunak be visiting homes in a shiny black Mercedes with a bunch of heavies in tow to demand his £200 back?

Perhaps this could be a new job for boris johnson 🤔 demanding money with menaces from the elderly, disabled and minimum wage households.

Imagine if your home energy bill from April would be £2100 (just above the "typical" capped £1,971). This includes £100 VAT. Imagine a government (maybe of a different hue) who decided to remove VAT from energy bills. Over the next two years you would pay £200 less. They might then want to raise tax to pay for it. They might choose to do this by putting VAT back on energy at 7% for the next five years so you would pay £2140 for 5 years. Then VAT would revert to 5% and the bill to £2100.

That's funny - it's so similar to the current scheme it's uncanny!

Of course the government of a different hue may raise the money in other ways (such as raising NI) or maybe they will just borrow it and pass the cost onto future generations.

It is a loan, because it has to be repaid. Its not a discount or the government doing me a favour. Its a scam.

Of course if you made the change by reducing VAT then people who use more energy would benefit more and vice versa: whether that's because there's more of them, or their home is larger or less well insulated, or they're profligate with usage.

Positively feudal if you ask me.

Agreed.

Even the New York Times can see how authoritarian Boris is being now

The freelance journalist who wrote that opinion piece attended Hereford Sixth Form College and King's College London (LinkedIn) - she's only in her mid-twenties and lives in the UK.

EU law meant that once we'd charged VAT on it we were unable to zero-rate it again

One reason we left the EU.

@Procrast

I don't want this £200. I'm over £1000 in credit with the electricity because I have everything switched off. They won't give me my money back and they keep increasing my dd. This £200 is a scandal.

Can you change supplier?

You will be given you some money now.

You will have to pay it back later.

Sounds like a loan to me.

@Clavinova

EU law meant that once we'd charged VAT on it we were unable to zero-rate it again

One reason we left the EU.

Yes, as I said, In fact one of the much-heralded benefits of leaving the EU was that we were free to zero-rate domestic fuel again.

And yet here we are, with the highest fuel prices in history, and the Conservative government have chosen not to remove the tax which a previous Conservative government inflicted on us, even though they can.

They do like taxing us through VAT though don't they, the Conservatives? 8% raised to 15% in 1979, 15% to 17.5% in 1991, and then 17.5% to 20% in 2011.

And people are worried about taxation under Labour.

VAT's a regressive tax of course - people with lower income pay a higher proportion of their income as VAT than people with higher earnings. Maybe that's why the Conservatives like it so much.

There will also be those who benefit from the £200 but then move in with someone else (so 2 lots of £200 but only paying 1 lot back). And of course those who get it but then die.

It goes both ways.

@IncompleteSenten

You will be given you some money now.

You will have to pay it back later.

Sounds like a loan to me.

Except you won't necessarily have to pay it back (e.g. if you move in with someone else) and you also won't necessarily get the money now (if you're now currently paying energy bills).

^if you're not currently paying energy bills

@Procrast

The only way I could get my overpayments back was by changing supplier. This was British Gas, they were so rude to me on the phone when I phoned to ask for my £600 credit back (in spring - who gets in credit over winter, unless they're being hugely overcharged), that I hung up and changed supplier. This was before the current crisis though, when it was easy to switch. Alternatively keep complaining in writing (so you have an evidence trail), then report to Ofgem.

@IncompleteSenten

You will be given you some money now.

You will have to pay it back later.

Sounds like a loan to me.

But you don’t have to pay it back. If you die, you don’t. If you move abroad, you don’t. If two people living alone both get £200, then move in together, they have to pay back £200, not the £400 they got.

And you don’t just pay it “back” if you get it in the first place. If someone moves out of their parents’ house in a years time, they will pay back £200 in their new house, and their parents will pay back the £200 they got. So between them they’ll pay back £400, not the £200 they received. Same for a couple who split up.

So it’s not like a personal loan, where person X owes £200, but person Y owes nothing because they were living abroad throughout 2022 and therefore they won’t pay the extra £40.

This isn’t me defending it by the way, I’d opt out if I could.