Union remains largely unaffected by VAT rise

The majority of prices at the Union’s outlets will remain unaffected by the recent rise in the standard rate of Value Added Tax (VAT), as expressed in a statement released last week.

The rate of VAT has been raised from 17.5% to 20%, as the Government looks to reduce the national structural deficit. Students will, therefore, suffer only a very minor increase in living costs for the next year.

The Students’ Union has revealed that although individual drink prices have increased by 5p, none of the existing drink offers will be affected, meaning that drinks at Top Banana will retain their current price of £1. All food prices in Xananas, The Bread Oven, Curiositea and the Dirty Duck will remain the same, as will ticket prices for events in the Copper Rooms.

As the majority of foodstuffs and books are exempt from VAT, there will be little change to many of the prices at Costcutter and in the Bookshop. Students spending money at outlets and non-union establishments on campus such as Bar Fusion will experience a 2.5% rise in prices on alcoholic drinks and food.

In fact, the SU point out that they have absorbed all rises in alcohol duty for the last three
years, during which time drink prices at the Union have never increased. Furthermore,
at the beginning of the 2010/11 academic year, all Copper Rooms drink prices were cut
by 10%, so relative to the year before, students will not experience higher prices at the
Copper Rooms as a result of the VAT increase relative to last year.

Ivan, a second-year law undergraduate, claimed that he personally would not care about an extra few pennies on drink prices, but argued that “Even a small rise such as that has a greater effect on students than most other social demographics”.

The SU have argued that the “extra 5p spent in the Student Union will be worth it as it helps sustain one of the biggest and most active SUs in the country.”

Some students have indeed theorised that the SU could potentially benefit from cheaper
prices, compared to Bar Fusion and other outlets in Leamington and Coventry. Thom Drake,
a Classics student, praised the Union for absorbing some of the tax increase, but worried
that “Considering the Students’ Union only recently recovered from financial turmoil, it’s just
another tax burden that can only be bad news for the Union’s services.”

His thoughts reflect a general, nationwide criticism over the tax increase. Although the
Chancellor George Osborne defended his increase in VAT as a “progressive move”, which
would help generate more than £13bn, the unveiling of the higher tax has encountered
widespread opposition.

The Labour party has accused the government of penalising low-income families and other marginal groups such as students because lower income households usually spend a bigger share of their incomes on taxed goods, meaning they are proportionally harder hit.

Nevertheless, it has been argued that the effect of the VAT rise is not overly substantial and
most likely will not drastically change spending habits. Chartered accountant
Adrian Houston stated that “Such a small price rise of 2.5% is unlikely to have a lasting
impact and after the first quarter of this year people will revert to their old spending
habits”.