Call for VAT cuts on “essential” telecoms as millions of people struggle to pay their bills

Call for VAT cuts on “essential” telecoms as millions of people struggle to pay their bills

Call for VAT cuts on “essential” telecoms as millions of people struggle to pay their bills

Nearly six million households are struggling to afford essential communications services such as cell phones, broadband and landlines as the cost of living crisis worsens, a group of consumers warned.

Which? asked the government to cut VAT on household telecommunication bills based on Ofcom data showing that about 5.7 million households have experienced problems such as having to reduce spending on other essential goods, cancel or change their service or miss payments in April.

The number of households experiencing multiple accessibility problems – for example, struggling to afford more than one telecommunications service or making more than one financial adjustment to afford telecommunications – increased 56% from February to April, according to the data.

An estimated 3.5 million households reduced their spending on other essential goods, such as food and clothing, in April to afford connectivity services, up from an estimated 2.2 million in February, an increase of 59%.

In April, one in five low-income households (22%) reduced spending elsewhere to afford connectivity services. This figure was one in eight (13%) for middle-income households, nearly double from 7% in February.

Which? he said that the fact that so many families have chosen to prioritize their telecommunications services during the cost of living crisis “further demonstrates how essential these services are to modern life.”

However, this was not reflected in how these services are taxed, the supervisory body said, urging the next prime minister to reduce the amount of VAT paid on telecommunications from 20% to 5% in line with other elements. essentials such as gas and electricity.

It noted that even the most financially vulnerable consumers were charged 20% VAT for social tariffs.

He estimated that reducing the telecom VAT rate to 5% would save the average household £ 120 per year.

Which? he also urged suppliers to support all customers struggling to afford their bills and to make them aware of any discounts they may be eligible for.

Which? Director of Policy and Defense Rocio Concha said: “The fact that millions of families have made sacrifices to prioritize broadband and mobile connections during the cost of living crisis demonstrates how essential these services are to modern daily life.

To help reduce utility bills, the next prime minister should reduce the VAT paid on telecommunications in line with other essential services. Businesses need to support anyone who is struggling to afford their bills and ensure consumers are aware and able to access the best deals. “

A government spokesman said: “We understand that people are struggling with rising prices, which is why we have taken action to protect the eight million most vulnerable British households through at least £ 1,200 in direct payments this year with additional support for retirees and those applying for disability benefits.

“Through our £ 37 billion support package, we’re also saving the typical employee over £ 330 a year through a tax cut in July, allowing people with universal credit to keep £ 1,000 more than they earn and reducing 5p fuel tax, saving a typical household £ 100.

“We have also secured strong commitments from broadband and mobile phone companies to help those who are worried about their bills at this difficult time, for example by allowing them to upgrade to cheaper packages without charges or penalties, or by agreeing on plans. of manageable payments “.

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