A five per cent VAT on static caravans is set to come into effect in April 2013 after the government’s Finance Bill was given the green light by the House of Commons.
It follows a concerted campaign which forced the Government to perform a u-turn over a rate of 20 per cent, but opponents argue that even a five per cent levy is going to have a major impact on the industry.
In the hours before MPs were set to vote on the revised Bill, Diana Johnson, Labour MP for Hull North, branded the caravan tax “crazy economics” and urged fellow MPs to vote against it, arguing that it would cost jobs while ultimately raising a paltry sum for the Treasury.
With many caravan manufacturers based in East Yorkshire, Ms Johnson has become a leading campaigner against the caravan tax – which was predicted to cause up to 7,000 job losses when it was proposed in its original form.
“The Government which promised to ‘rebalance the economy’ is targeting a damaging new tax on small manufacturers in one of the poorest areas of the country,” she told the Hull Daily Mail.
Ms Johnson argued that overall the tax will cost the Government money, with the £10 million a year generated by the tax not enough to warrant the decrease in demand and subsequent job losses it will cause.
“This is a tiny amount, especially given the millions found in the budget to give millionaires a tax cut,” she added. “This is crazy economics.”
