Dan Neidle

Food, much bigger element.

But again, what we should be doing is we should be equalising the rate with everything else.

We should be dropping the rate and we should be protecting people on lower incomes so they don't lose out.

Because most of the benefit from the VAT zero rate on food doesn't go to the poor.

Most goes to people spending a lot on food.

And that's people who are richer.

There is a big problem with VAT and its effect on business, which is that if you do a chart of the number of businesses for each

size of business, each amount of turnover the businesses do.

What you'd expect to find is lots of tiny businesses and then fewer and fewer numbers, nice smooth curve to get to a small number of very large businesses.

That's what you'd expect.

What you actually see is the curve goes down until it gets to the VAT registration threshold.

Then there is a huge bump up, a number of additional people deliberately holding their revenue below what's now 90,000 and then a cliff edge and very, very few businesses beyond that.

So VAT incentivizes businesses to not grow, to keep their size below 90,000.

Some people say, oh, well, you should increase the threshold.

Madness.

It's bad enough to stop small businesses growing.

To stop larger businesses growing is even more economically damaging.

So the rational policy there is to have a much smaller threshold, which most of the rest of the world does.

There's something weird about business rates.

And the witness is this.