Call for VAT cut on ‘essential’ telecommunications as millions struggle to pay bills

Nearly six million households are struggling to pay for essential communications services such as cell phones, broadband and landlines as the cost-of-living crisis deepens, a consumer group has warned.

What? urged the government to reduce VAT on household telecom bills based on Ofcom’s data, which shows that around 5.7 million households faced problems such as reducing spending on other essentials, canceling or changing their service, or missing payments in the month Of april .

The number of households who had multiple accessibility issues – for example, who had difficulties paying for more than one telecom service or made more than one financial adjustment to pay for their telecoms – increased by 56% from February to April, the figures show.

An estimated 3.5 million households reduced their spending on other essentials such as food and clothing to pay for their connectivity services in April, up from an estimated 2.2 million in February – an increase of 59%.

One in five low-income households (22%) reduced spending elsewhere to pay for connectivity services in April. That number was one in eight (13%) for middle-income households – nearly doubling from 7% in February.

What? said that the fact that so many families chose to prioritize their telecom services during the cost-of-living crisis “further demonstrates how essential these services are to modern life.”

However, this has not been reflected in the way these services are taxed, the watchdog said, urging the next prime minister to reduce the amount of VAT paid on telecoms from 20% to 5%, in line with other essentials, like gas and electricity.

It noted that even the most financially vulnerable consumers were charged 20% VAT for social tariffs.

It is estimated that reducing the VAT rate on telecommunications to 5% would save the average household £120 per year.

What? it also urged suppliers to support customers struggling to pay their bills and to inform them of any discounts they may qualify for.

What? Policy and Advocacy Director Rocio Concha said: “The fact that millions of families have made sacrifices to prioritize their broadband and mobile connections during the cost-of-living crisis demonstrates how essential these services are to modern day life. to-day

“To help reduce billing costs, the next prime minister should reduce VAT paid on telecoms in line with other essential services. Businesses must support anyone struggling to pay their bills and ensure consumers are aware and can access the best deals.”

A government spokesperson said: “We understand that people are struggling with rising prices, which is why we are taking action to protect the eight million most vulnerable British families through at least £1,200 in direct payments this year. year, with additional support for retirees and people claiming disability benefits. .

“Through our £37bn support package, we are also saving over £330 a year for the typical employee through a tax cut in July, enabling people with universal credit to keep £1,000 more than they earn and cutting the fuel tax by 5p, saving a typical family £100.

“We also secure strong commitments from broadband and mobile companies to help those worried about their bills during this difficult time, such as allowing them to migrate to cheaper packages with no charge or penalty or agreeing to manageable payment plans.”

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