New Government ‘set to increase VAT’

May 19, 2010 | Blog

The rate of Value Added Tax is set to increase under the new Government, according to a recent study.

In a survey of independent economists conducted by the BBC, 24 out of 28 experts predicted that VAT will rise in the coming parliament.

Most of the economists interviewed believe that the rate will increase from 17.5% to 20% before the end of next year.

Such a rise would bring in additional revenue of around £11.5bn a year.

The standard rate of VAT was temporarily reduced to 15% in December 2008, in a bid to boost consumer spending during the recession.

The Conservative-Liberal Democrat coalition has committed to making £6bn of spending cuts this year with the aim of reducing the deficit.

The new Government will hold an emergency Budget on 22 June.

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