VAT Reduction Could Lower Cost Of Scilly’s Freight Says MP

Derek Thomas

Derek Thomas

Scilly’s new MP says an exemption on VAT could be a novel idea to help reduce freight costs to the islands.

Derek Thomas spoke to Radio Scilly during a one-day visit to St Mary’s on Friday.

He said we’re “not going to win the argument” on a passenger subsidy, because the rules just don’t allow it.

But he feels that if the cost of getting goods back and forth could be reduced, it would benefit everything from housing to tourism.

Derek says he’s already contacted the Treasury and Chancellor George Osborne to discuss his idea, similar to the lower fuel duty paid by Scilly and several island communities in Scotland.

The real challenge would be to ensure that any reduction is passed on to customers fairly, he says.

And in a time of austerity, he’ll need to show that a VAT exemption would be “cost neutral” to the government.

But he believes that could be achieved through the increased tax being paid as a result of more housing and employment on the islands.

Derek doesn’t rule out further help being provided to “soften” the cost of goods here too, if a VAT reduction isn’t sufficient.

And he says he’s using the fact that he’s a brand new MP with a slim majority, to his advantage to get as much as he can for the area.

It’s a chance to restart discussions with government departments and to look at Scilly’s transport problems “from a fresh view and a different angle,” says Derek.



6 Responses to VAT Reduction Could Lower Cost Of Scilly’s Freight Says MP

  1. Adam Morton, St.Martins July 28, 2015 at 9:10 am

    I read it as potential zero vat on the freight only, ie 20% of your freight bill if you are not a vat registered business.As he says “cost neutral to the government ” its safe to say it won’t have any impact on our economy. The average wage here is £13660 so they aren’t going to raise much of that in tax from the extra people coming to live in the new houses that you can claim the vat back on anyway!Of course no one is going to say no to 5p off a pint of milk etc but its not exactly a lifeline!
    A lifeline service delivering necessities which any normal taxpaying village would expect in the form of a road provided by their Council. There is a formula for public spending spending although the Council would have you believe that heroic officers have achieved it against all odds!

    https://en.wikipedia.org/wiki/Barnett_formula

    That funding disappears into public seating, airport lounges and quay upgrades and makes it look like the Council is achieving as well as leaving none for true lifeline services. This fits in neatly with Mr Thomas’s declared non interference in the affairs of our biggest monopoly! One would think that helping the local economy with the provision of goods at more normal costs through tendering for a subsidy would be in all our interests but apparently not! I really don’t see that transporting essentials for food ,fuel and shelter at affordable rates contravenes any regulations or is in fact unaffordable. There are 14000 tons of goods carried
    https://en.wikipedia.org/wiki/Gry_Maritha
    At costs of between approximately £90-£280 a ton which means (in theory) it should cost no more than a couple of million pa. Enough detail and solutions for you James?

  2. John Smiths bitter July 27, 2015 at 4:53 pm

    I agree with Adam, I’m afraid johnny Tory MP is just playing to the gallery and telling people stuff they want to hear. Introducing a zero VAT rate on all goods and services just for the islands is not a practical option. Think about a pallet of food shipped over by the coop, at what point is the vat on that food exempt, when the coop buys it from the supplier, or when its shipped down to Penzance or when its loaded onto the boat, or at the point of sale etc. The tax implications are to intricate for such small beer as the ios.
    The only thing that Tory boy is really interested in, is his slim majority and imposing his government austerity cuts.

  3. Soutie July 27, 2015 at 2:57 pm

    I agree with Adam on this issue and his posts are well argued and constructive.

  4. James Ralph-Smith July 27, 2015 at 12:08 pm

    Adam you are quite the most negative person in EVERY comment you make about any subject.

    You never provide a realistic solution, you never support even the smallest change which often leads too bigger things.

    If you put all the energy you put into your negative comments to everyone and everything into supporting the islands then we would all be in a better place.

    Maybe stop being such a stick in the mud!

    Apologies but your rants are being to grate

    • Adam Morton, St.Martins July 27, 2015 at 2:24 pm

      James Smith whoever you are, if I agreed with it then there would be no point in commenting would there? You know nothing about me or what energy I put into supporting the islands- the real islands that is, not right wing ignorant fat cats!
      I have lived and worked here all my life and I am tired of the same old story going nowhere- it was three years ago we elected a council with transport as a clear priority,it was nearly 17 years ago they started talking about a replacement ferry- how much closer are we? It was 30 years ago David Harris raised most of the same problems we have today after the moss report- almost nothing happened then either! I tried standing for Council and did my best for my island when most of the other bigger businesses went bankrupt or closed a few years back. I dont want to see those times come back again which means we need to push for real solutions rather than dog eat dog squabbling over the last few customers!

  5. Adam Morton, St.Martins July 27, 2015 at 11:34 am

    It just won’t be enough! His chums in the SSco will simply absorb it in “long overdue and necessary increases”. This needs real commitment to reducing costs by at least 75% otherwise its useless and not worth the bureaucracy. Businesses can claim VAT back already so this means absolutely nothing unless the whole of the islands become VAT exempt which will reduce prices to visitors in bigger establishments that exceed the threshold. In real terms freight adds 10% to the cost of a meal on a 3X mark up so VAT off means 2% off . The duty he refers to is that on agricultural diesel the same as anywhere else in the country)not petrol or road diesel. I think there was a further 5p negotiated by his predecessor at one point but not sure if its still in place- certainly isn’t noticeable.
    Transports costs over and above those in Cornwall started at £13m last year which devalues the economy by £6500 per person whether in freight or reduced visitor spending. This is just another distraction to stop anything meaningful being achieved.