Rachel Reeves has been urged to rule out a “taxi tax” by campaigners who warn it will make life harder and more expensive for key workers. The Chancellor is facing calls to step in and stop VAT being charged at 20% on all private hire vehicle journeys.
Campaigners say it will push up travel costs for nurses, carers and shelf-stackers, especially for those who carry out shift work. It comes as polling for the Stop the Taxi Tax campaign shows that 70% of Britons consider taxis to be an essential service. Two-thirds agree the move amounts to a tax on working people.
More than half (52%) say the measure will make cabs unaffordable for them.
The tax, which has been compared to previous Budget disasters such as the “pasty tax”, would especially impact those working shifts when public transport is unavailable.
Andrew Goodacre, chief executive of the British Independent Retailers Association, said: “Retail workers are often the unsung heroes of our communities – starting early, finishing late, and working shifts when public transport isn’t available.
“For many shop staff and shelf stackers, minicabs and PHVs are a necessity.
“Adding VAT to these journeys will hit them hard, making it more expensive simply to get to and from work. It’s an unfair tax on working people – often earning minimum wages – who help keep the country going, and damaging to the high streets that rely on them.”
Ramzi Suleiman, policy and public affairs manager at Carers Trust, said: “Carers and the people they care for rely on accessible taxis to get around and to live independently. That means they face unfair extra costs just because they need to travel in accessible vehicles.
“This proposed VAT rise will come as yet another frightening blow for carers, making it even harder for them to support those they care for.”
The Stop the Taxi Tax campaign is made up of more than 100 local minicab and PHV operators, as well as charities and groups such as the Survivors Trust, the Night Time Industries Association, and the Rural Services Network.
A spokesperson for the Stop the Taxi Tax campaign said: “The Taxi Tax breaks Labour’s manifesto promise not to raise VAT. Not only that, it will hit key workers particularly hard, for whom taxis are often an essential service, particularly when finishing a shift late at night.
“Making the numbers add up on a Treasury spreadsheet cannot come at the cost of making life harder for the workers who keep our country running.”
Ms Reeves is being challenged to rule out levying VAT, given Labour’s manifesto committed to not raising VAT, income tax and National Insurance contributions.
Internal government analysis last year found that a third of the private hire market, which is still operating under an agency model, would lead to increased fares of 1.25-2.5%.
The Treasury has said it is reviewing the feedback from a recent consultation.