Let's get some other facts out first of all. We will still have one of the lower tax rates in Europe. At the moment, there are only a few countries (eg Luxembourg, Montenegro) that charge a lower rate than we do. And, even after the change, quite a few (eg Ireland, Iceland, Sweden) will still charge a lot more.
See here. We also have an
earlier tax freedom day than many other countries, despite some newspapers moaning about it being 3 days later this year.
And, just to put the actual rise into perspective, it will have little effect on any prices for day to day things. For example, a cup of coffee will only rise by a few pennies, and a weekly shop by only a few pounds. However, the cost of big things (like cars) will go up by several hundred pounds as a result of the changeover. And all in all, the pennies here and there will mean that we hand over quite a bit more in VAT (although it will be largely insensible). For example, the £100 weekly shop I mentioned earlier will rise by £2 a week, assuming all items will be subject to a 20% tax rate. Over the course of the year, that's over £100 more lost.
Here's a handy tool on the BBC website if, like me, you can't be bothered doing the maths.
The rise itself, as I've said above, I don't think is too bad. It's not something anyone wants, granted, but when you consider other VAT rates (see above) and the national (and indeed international) economic state , I don't think it's that bad. But what does annoy me is that it's only just gone up from 15% (granted that was only a temporary measure). A 5% increase is quite significant if you ask me. And I think that this cumulative effect will be noticeable, particularly on more expensive commodities.
I'm also slightly worried that the increase will mean that retailers jack their prices up again. We saw it with the 15% palaver. They "pass on the savings", then put it up to silly amounts, then round it up. So the actual effect on your weekly shop might be quite a bit more if they do this. And there's nothing to stop them rounding up £2.04 to £2.10 etc later on in the year - again there's the potential to take a lot extra with this (as I'm sure happened with last year's rise).
The thing that amuses me is the panic buying in the sales. "Get it now before the VAT goes up". The £20 DVD boxset that they're advertising is only going to go up by 40p! That's assuming they haven't already allowed for that in their pricing, which many retailers will do. Maybe I'm being just a bit paranoid, but the rise seems to be a gift to the retailers as much as it is to the exchequer, for better or for worse.
