Gender analysis of the changes in indirect taxes introduced by the coalition government, 2010-2011

Background

This report examines the coalition government’s main changes in indirect taxes from a gender perspective. It provides a separate analysis for changes in excise duties on alcohol, tobacco and fuel, and in VAT; and an analysis of the combined effect of these changes, together with changes in insurance premium tax, air passenger duty and gambling duty. We have not included the remaining indirect taxes, namely customs duties, fossil fuel levy, motor vehicle duties, licences for driving and TV, and stamp duties, because we did not have adequate expenditure data on the goods which are subject to these taxes. More detail on the methods we used to compute the amount of indirect taxes paid by different kinds of households can be found in Appendix A.

The March 2011 budget introduced some immediate changes in several excise duties.

Main Changes

• Alcohol duties were increased by 2% above the RPI, adding 4 pence to the price of a pint of beer, 15 pence to the price of a bottle of wine, and 54 pence to the price of a bottle of spirits.
• Tobacco duties were also increased by 3% above RPI, and the duty was restructured, adding 50 pence to a packet of economy cigarettes and 33 pence to a packet of premium cigarettes. This will collect £80 million in the 2011/12 fiscal year and is estimated to collect similar amounts in the next 4 years.
• The fuel duty escalator, introduced by the Labour Government in 2009, was abolished. (This had ensured that fuel duty rose above the rate of inflation, incrementally). In addition the main fuel duty rate was cut by one penny per litre. This is estimated to cost the government £1,900 million in 2011/12 fiscal year, and will continue to cost similar amounts in the coming years.
• These changes came on top of the rise in VAT from 17.5% to 20%, introduced in the June 2010 budget, which came into effect on 4th of January 2011. This is estimated to raise £12,100 million in 2011/12 fiscal year.
• More details of the changes can be found in Appendix B.

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