VAT Rate May Increase To 20% In 2010

VAT Rate May Increase To 20% In 2010

Yesterday, the Office for National Statistics (ONS) released provisional
estimates of the public finances showing that in October 2009 the public sector

  • a current budget deficit of £7.7 billion;

  • net borrowing of £11.4 billion; &
  • at the end of October, net debt was £829.7 billion, equivalent to 59.2% of
    gross domestic product.

UK “skint as a country”

On 1st January, the UK’s will end as the tax rate returns to 17.5%
from 15%.

M&S chairman says we should expect another increase
next year as the Government looks for ways to pay off the deficit.  “We are
skint as a country,” he said.  “The Treasury needs revenue so I would not rule
it out … this Government and the future Government have got to make some hard
decisions about refilling the coffers”.

Retailers, already squealing about the return to a 17.5% VAT rate, fear a
further increase would kill off the recovery before it’s begun. 

But the estimates a VAT increase to 20% would raise
an additional £12 billion a year for the public purse.  And levying VAT
on food – which is currently exempt – albeit at a lower rate of 5%, would bring
in another £3.5 billion a year.

** Additional Information & Advice **

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