Experts believe 20% VAT hike is ‘inevitable’
Tuesday January 26, 2010
Experts believe that a further rise to the current 17.5 per cent VAT will be inevitable.
Analysts at consultancy Oxford Economics said that after the next general election, the UK Treasury will have to increase VAT to 20 per cent in order to tackle rising debt levels, the Daily Mail reports.
The VAT hike would generate an extra £12 billion a year in revenue, which could go towards battling the UK’s biggest debt crisis since the Second World War, the firm said.
Neil Blake, of Oxford Economics, said the VAT hike would help fund spending cuts in other areas, which are necessary to help plug the budget shortfall.
“There appears to be a political consensus that spending cuts should form the bulk of the tightening but we can’t see how the necessary adjustments can be made without further tax rises too,” he told the Daily Mail.
A recent Accountz survey found that more than half (61 per cent) of consumers are content with the current VAT rate.