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Who will get behind loo roll zero-rating campaign?

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A toilet tissue company has rolled out a petition calling for the product to be zero rated for VAT. Will the Chancellor be persuaded to reduce the VAT and would consumers actually benefit if he did?

29th Feb 2024
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The loo roll brand Who Gives a Crap, popular for its sustainability credentials and Instagrammable packaging, is the latest business trying to persuade the government to reduce the VAT rating of its product to zero.

In partnership with The Hygiene Bank, the company has launched a petition titled Scrap the roll tax: toilet roll is not a luxury, calling on the Chancellor to reduce the VAT applied to loo roll from the standard 20% to 0%. The petition begins: “Every day, people are being hit with a hidden ‘Roll Tax’ because toilet roll is classed as a luxury – meaning it’s subject to an extra 20% VAT. That’s a bum deal for Britain – especially when caviar, helicopters and marshmallow teacakes are VAT-free.”

Bum deal for Britain

Comparisons to items associated with lavish lifestyles lend credence to the argument that toilet roll shouldn’t be classed, for VAT purposes, as a luxury. Ruth Brock, CEO at The Hygiene Bank said “We know that people are, in increasing numbers, struggling to afford essential hygiene products due to the pressure of the cost-of-living crisis. It’s crucial that we remove VAT from toilet rolls to help bring prices down and support those facing hygiene poverty.”

Unsurprisingly, the headline-grabbing campaign has proved popular and at the time of writing 16,173 signatures have been added to the petition. Comments from supporters range from “Hygiene is an essential part of life not a luxury!” to ‘I don’t find wiping my bum luxurious. Do you?”

According to the Hygiene Bank, scrapping the VAT on loo roll could hand the average UK household savings equivalent to 3.2 days of petrol and diesel, 2.5 days of household gas and electricity or over two weeks of fresh fruit and vegetables.

So why are the UK’s leading tax and VAT experts not championing the campaign?

The bottom line

Among AccountingWEB readers it is broadly understood that zero rating a product rarely achieves the desired effect of making an “essential” item more affordable. More often than not, suppliers choose to – or need to – keep the extra saving to boost their bottom line, so there is no discernable difference to the end consumer.

Who Gives a Crap has pledged to ensure that the customer sees 100% of the VAT saving.

In March 2020 a lobbying campaign by the publishing industry succeeded in removing the 20% VAT on ebooks, bringing their tax treatment in line with the zero rating of physical books. Publishers claimed that removing VAT from ebooks would mean that people who buy them would benefit from lower prices, but a report by Tax Policy Associates found that not to be the case. Based on the standard rate of VAT at the time, ebook sellers could have reduced their prices by up to 17% without impacting their profits. However, analysis of detailed Office for National Statistics sampling data of ebook pricing in the report showed no overall reductions.  

Tax Policy Associates founder Dan Neidle told AccountingWEB: “They promised consumers would get the benefit. In fact, we found none of the 20% VAT cut went to consumers – publishers snaffled the lot.

“So it’s depressing to see the same promises made by suppliers. And even if these bogroll makers, with approximately 0% of the market, are saints who are telling the truth, and will pass on all the benefit to consumers, are we supposed to just take it on faith that all the other suppliers will too?

“The campaign is deeply dumb and deserves to fail.”

Reaching for the tissues

However, the public heartstrings are easily tugged and campaigns in this ilk have a history of succeeding.

From January 2021, following a high-profile campaign, the 5% rate applied to period products known as the “tampon tax” was cut to 0%. Unfortunately, according to a comprehensive report by Tax Policy Associates in November 2022, only around 20% of the saving (so a 1% cost reduction) was passed on to the end consumer.

Despite this, a subsequent petition, “Say Pants To Tax”, spearheaded by period pants brand WUKA and backed by Marks and Spencer, garnered enough support to persuade the government to extend zero rating to period underwear.

Giving in to this sort of lobbying can be dangerous. Posting on LinkedIn, Rita de la Feria, professor of tax law at the University of Leeds, warned: “The question is (again) not whether the aim is meritorious (it is), but whether a VAT cut is the right instrument to achieve it (it is not).

“The problem is that we have given in too often (not just in the UK), thus creating a moral hazard. Pressure from lobby groups will increase, even more in an election year. Brace yourselves.”

Avoiding a wipeout

It is likely that the Spring Budget on 6 March will be the last before the next general election. With very little wriggle room in the coffers, the Chancellor will be scrabbling around for low-cost, election-grabbing giveaways. Tweaking the VAT rating of specific products could prove a popular but relatively inexpensive option.

If Jeremy Hunt wants to tinker with VAT a far more impactful measure would be to increase, reduce, or even abolish the VAT registration threshold, the arbitrary turnover limit that has been frozen at £85,000 since 2017/18. But that wouldn’t make nearly as good a soundbite for a government desperately trying to cling on to voters.

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Replies (27)

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By Justin Bryant
29th Feb 2024 16:39

DN is right. Similar to how the Covid SDLT holiday went straight into sellers' pockets.

Thanks (5)
Replying to Justin Bryant:
RLI
By lionofludesch
06th Mar 2024 14:02

Justin Bryant wrote:

DN is right. Similar to how the Covid SDLT holiday went straight into sellers' pockets.

It's another chocolate Nesquik.

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By FactChecker
29th Feb 2024 19:39

Aside of wondering what's been added to the drinking water in Aweb Towers (this continuing need to reference loo-rolls and bottoms is beneath me - which is where it has always resided) ... Justin (and others) are of course correct.

The only surprise is the complete lack of understanding of the basics of Economics by those making these suggestions - and more importantly those stupid enough to listen to them.

Property: changing the SDLT band/rate had no intrinsic effect on either supply or demand, it just put more 'spending' money in the purchasers' wallets - and as that was known by the sellers, the purchase price was adjusted to transfer the bounty for no extra effort or investment. Look surprised?

I know even less about the market for loo-rolls, but can't conceive of any fundamental shift in supply or demand following the removal of VAT ... so 'rinse and repeat' as per Property.

Thanks (4)
Replying to FactChecker:
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By FactChecker
29th Feb 2024 19:44

BTW is there any more detail on the Hygiene Bank's "average UK household"?

I'll refrain from specific comments - but a direct equivalence from "scrapping the VAT on loo rolls" to their spending on:
- 3.2 days of petrol and diesel, or
- 2.5 days of household gas and electricity, or
- over two weeks of fresh fruit and vegetables?

Presumably omitted was that the 'loo roll saving' was over the course of a year - so any saving that managed to flow through might buy an extra banana to be shared by the whole family once per month?
But that's a family with some very weird imbalances already in their spending habits!

Thanks (3)
Replying to FactChecker:
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By Paul Crowley
01st Mar 2024 13:05

Regional variations. The VAT saved would finance a year's worth of fruit and veg in certain areas

Thanks (2)
Replying to FactChecker:
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By bendybod
01st Mar 2024 09:58

I don't think I'd want to repeat after I'd rinsed most loo rolls.

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By Paul Crowley
29th Feb 2024 22:03

Everything with VAT on is a luxury? Suppose I will have to go naked to avoid being a person who flaunts his wealth.

Thanks (4)
Replying to Paul Crowley:
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By unclejoe
01st Mar 2024 09:57

If you go naked you will be flaunting your assets!

Thanks (2)
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By Open all hours
01st Mar 2024 08:14

Non starter for reasons stated elsewhere. And no I wouldn’t ever buy from these lot because of the name. Same applies to Sweaty Betty and Fatface.
If the brand sounds unappealing I probably wrongly assume the products are also unappealing.

Thanks (1)
Replying to Open all hours:
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By 2TunTed
01st Mar 2024 09:42

The products are excellent.

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Replying to 2TunTed:
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By bendybod
01st Mar 2024 09:58

I second that

Thanks (1)
Donald MacKenzie
By Donald MacKenzie
01st Mar 2024 09:52

"According to the Hygiene Bank, scrapping the VAT on loo roll could hand the average UK household savings equivalent to 3.2 days of petrol and diesel, 2.5 days of household gas and electricity or over two weeks of fresh fruit and vegetables."

For the above to be the true the people would have to be spending an awful lot on loo roll

For simplicity, lets say someone spends £10 per week on fruit and veg. To save two weeks worth would be £20. Do we really believe people spend £120 a year on loo roll? With loo roll available at under 20p per roll that would be about two rolls a day!

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Replying to Donald MacKenzie:
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By bendybod
01st Mar 2024 10:02

That would be a very cheap fruit and veg shop for a whole household! We spend about £20 for two of us! Mind you, we're clearly not average, since we spend nothing on petrol (well, to be fair, hubby fills his motorbike up every few weeks) and our monthly gas and electric bill at this time of year is £120 per month including running the EV!

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Replying to Donald MacKenzie:
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By rememberscarborough
01st Mar 2024 11:40

Just checked our local supermarket and branded toilet roll is on "offer" at 55p per roll. Can't see anything as low as 20p not even their own brand so think your figures might need adjusting....

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By roger brisley
01st Mar 2024 09:56

Will this wipe out the Conservatives?

Thanks (3)
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By mkowl
01st Mar 2024 10:02

Great idea, its about time the throwing of toilet rolls from the back of the terraces became a thing again

Thanks (2)
By JCresswellTax
01st Mar 2024 10:09

Should ask those at Aweb who like toilet talk!

Thanks (1)
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By ColA
01st Mar 2024 10:15

Might even be a candidate for roll-over relief!

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By Nebs
01st Mar 2024 10:20

As anyone who takes the Guardian/Daily Mail* will know, toilet rolls are a luxury and are far from essential.

*delete as you see fit.

Thanks (1)
Replying to Nebs:
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By FactChecker
01st Mar 2024 11:08

Certainly far from essential if you re-use strips from your Guardian/Daily Mail* .

*delete as you see fit.

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By ireallyshouldknowthisbut
01st Mar 2024 10:43

I think you will find that this proposal is really just an advertising campaign.

Thanks (2)
Replying to ireallyshouldknowthisbut:
Jake Smith, AccountingWEB
By Jake Smith
01st Mar 2024 10:49

Ooh you cynic! They didn't pay us, that would have been dirty money...

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By Marlinman
01st Mar 2024 10:49

My annual expenditure on them is nil as I pick them up from hotel rooms.

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Replying to Marlinman:
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By rememberscarborough
01st Mar 2024 11:41

Free toilet rolls at the local nick as well....

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By Ian McTernan CTA
01st Mar 2024 12:15

How about we flush this sort of article down the pan?

Thanks (1)
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By G Grahame
01st Mar 2024 12:23

Why stop at loo roll? There are other basic hygiene essentials that should carry VAT at 0%, such as washing up liquid, washing machine powders/liquids, handwashes/soaps, toothpaste and even deodorant. Cleanliness and good hygiene is a necessity not a luxury. The Treasury should zero rate them and somehow ensure that the VAT savings are passed to the consumers.

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By Rob Swan
01st Mar 2024 13:52

Some toilet 'Tissue' is definitely sold as a 'luxury' product. We're heading for the loo roll equivalent of the Jaffa Cake case....

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