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PHV VAT: Campaign for ZERO tax rates reaching fever pitch before Spring Budget

New findings have highlighted a strong public opposition to the proposed imposition of VAT on private hire fares, a move that could see costs soar by up to 20%. A survey conducted by the ‘Stop the Taxi Tax’ coalition has revealed that 75% of people stand against this increase, with the figure rising to an astounding 79% among 16 to 24-year-olds.

In a plea for reconsideration, the coalition is urging the Chancellor to open consultations on this critical issue in the forthcoming Spring Budget, slated for Wednesday 6 March. The aim is to avert the implementation of this tax, which threatens to significantly burden thousands who depend on services ranging from ride-hail giants like Bolt to local taxi operators.

The prospect of a 20% hike in minicab fares has sparked widespread concern within the industry. A survey that focuses on private hire customers saw 71% of respondents worried about their future affordability; 40% of these individuals expressed extreme anxiety over the potential financial strain.

The apprehension is notably pronounced among women and the youth, demographics that have traditionally relied on the affordability and accessibility of private hire services for their transportation needs. Furthermore, a parallel study has underscored the critical role minicabs play in ensuring safety during night-time travel, with 85% of participants voicing concerns over personal security should these services become financially out of reach. Women, in particular, exhibited heightened worry, with 90% fearing for their safety, compared to 79% of men.

Geographical disparities in safety concerns were also evident, with cities like Cardiff, Sheffield, and Belfast expressing the highest levels of anxiety regarding the potential fare increases made by operators.

It's important to note that the proposed VAT adjustments will not affect traditional taxis, which are regulated by local authorities and will maintain their current tariffs. They are not subject to the change in tax burdens due to working separately to ride-hailing and operators. Taxi drivers must administer their own VAT burdens, which cannot be added to local tariffs.

In response to the issue, Chancellor Jeremy Hunt has committed to a consultation on the VAT treatment of Private Hire Vehicles in early 2024, following a High Court ruling that inadvertently necessitated the application of a 20% VAT on such fares. This development has galvanised private hire operators across England, who are now collectively advocating for a 0% VAT status on PHV journeys, highlighting the widespread implications of this legal interpretation on the industry at large.

A spokesperson for the campaign, says: “The Chancellor must step in now and take action to stop the impending increase in taxi fares, by committing to a consultation on the issue in the upcoming Spring Budget this March. 

“People across the country are concerned about whether they would be able to afford to take a taxi should the proposed hike in fares come into force. Many opt to take a taxi because they feel as though it is their safest option. With the cost of living at an all time high, people could be forced to make tough choices when it comes to what they can and can’t afford.”


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