BBC ‘Moneybox’ programme – politically biased or just incompetent?

I have to admit that I am not a regular listener to BBC Radio 4’s ‘Moneybox’ consumer advice programme. However, I happened to be listening to the first part of today’s programme and heard the presenter, Paul Lewis (whom I knew years ago when he was Deputy Director of the National Council for One Parent Families and we were both involved in the National Fuel Poverty Forum), explain to listeners that as a result of the Chancellor’s decision to raise VAT to 20% the public was now paying a fifth of the shop price as tax on non-exempt items.
At the risk of sounding like an old f*rt, I have to point out that he was, of course, wrong.
(For the arithmetically challenged, the correct answer is a sixth – if the base price of an item is £100, VAT of 20% brings the shop price to £120, so £20 or one sixth of the purchase price goes in tax.)
No doubt, the Chancellor might have liked to clobber those on low incomes even harder, but the fact is that he didn’t.
Presumably, Jeremy Hunt (not the biggest fan of the BBC given the famous ‘Today’ spoonerism) will see this as yet another example of BBC political bias.
I fear, however, that the most likely explanation is incompetence. The programme’s script-writers cannot do simple maths.
But it is a bit worrying for a programme that is supposed to provide its listeners with financial advice.

4 thoughts on “BBC ‘Moneybox’ programme – politically biased or just incompetent?”

  1. The increase in indirect tax will be “balanced” by a corresponding reduction in direct tax in time.

    Osborne is on record as regarding “flat rate tax” as “interesting.”

    Bojo has called for a reduction in the 50p top rate.

    This is part of the “rebalancing” they talk about.

    If they suit those who are well off enough to imagine these changes might suit them or at least that the cuts might do down those poorer than they are, then the hundreds of billions in avoided and evaded tax people like Ashcroft Murdoch and the Barclays aren’t paying become more acceptable to more people.

    They have not yet managed to change the post Banker and Expenses zeitgeist: Labour has to concentrate on concentrating the public’s minds on the real situations not mere PR lines.

    We have to “Get Real!”

  2. When making criticism it is important to be precise. You correctly state that £20 is 1/6th (16.667%) of the total price. But given that the purchase price, excluding the Governments cut, is £100 then the Tax represents 1/5th (20%) of that amount.

    The key point is what you decide the purchase price is.

    Many companies quote their prices ex-VAT, while in the High Street virtually all prices are inc-VAT. Thus it is a matter of opinion which is correct.

    It would be nice if a politician were able to be precise about what is presented (I know, I’m naive), unfortunately this inevitably reduces the opportunity to ‘have a go’ at someone or something.

    Overall, both views are correct – depending on the point you wish to make!

  3. I am quite clear: the “purchase” price is the price the end-customer pays and VAT is one-sixth of that. I termed the ex-VAT price as the “base” price. You are right to say that many professional services quote prices excluding VAT, but what the customer pays includes VAT and that VAT is still one-sixth of the total price paid.

  4. Toby,

    Just a thought: we all understand that VAT is 20%, thus we all understand that it is a fifth of the purchase price when actually it is a sixth (when purchase price is taken to be the complete price of the article). I think this shows a confusion in most consumers thinking (and lack of understanding of percentages) in that this apparent dichotomy is accepted without comment.

    Perhaps politicians (particularly those who are raising taxes) should have said that they are reducing tax to 16.67% of the purchase price from the ‘outrageous’ 17.5% that it was previously. If I were a politician I would be delighted to describe a tax rise as a reduction and, at least in part, still be telling the truth.

    All the best.

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