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New PM Refuses to Rule Out Rise in VAT

I have been reading news reports and expert views on the rate of VAT since before the election actually took place.  As a consequence of this it became clear that many people were fully expecting the winning party to raise VAT to help funnel cash towards bringing down the national debt.  Many commentators speculated on rises of between 1.5% and 2.5%.

David Cameron’s first interview made for interesting viewing this month, and he said he would not rule out a potential rise in VAT when his coalition government makes its first emergency Budget statement in June.

I noticed he mentioned the figure of 20%, which does match with what many commentators and experts were speculating on.  Although I noticed the question repeatedly came up, the new PM repeatedly refused to state whether there would be such a rise or not.  Perhaps the new Chancellor George Osborne has not yet decided whether a rise in VAT would be the best move.

I think the PM’s comments seemed to steer more towards other areas of funding rather than looking to raise VAT.  But of course until the emergency Budget takes place – as the PM said himself – we shall just have to wait and see what happens.  No doubt many people would be disappointed with a raise, but a rise in Income Tax would be even more unpopular, I think.  And of course we all know the national debt has to be tackled above all else, even though unpopular decisions will have to be made for this to happen.

In the meantime, if you would like tax advice for your own life or business, talk to us here at St Matthew.


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