Loading ...Whichever government emerged recently, I have long been convinced that VAT will rise. Now the BBC has revealed that a survey of influential economists agrees.
24 out of the 28 independent economists used by HM Treasury to assist its forecasts expected VAT to rise in the coming parliament.
Most predicted a rise from the current 17.5% to 20% before the end of next year which would raise an estimated £11.5bn annually.
An increase in tax on consumption is seen as an attractive way to boost government revenues, given that very few argue that cutting the country’s budget deficit is the no. 1 priority.
And any changes to VAT and other taxes could be unveiled in the emergency Budget to be announced within 50 days.
The BBC reported one respondent saying that “the UK economy is probably strong enough to withstand the expected cuts and tax rises. While earlier cuts in public spending are inevitably going to dampen economic growth, the UK recovery appears to be gathering pace” .
While I would never pretend to accurately predict the timing or extent of any rise in VAT, I think the Lib-Dem policy – adopted by the coalition – of increased income tax thresholds means that its sooner rather than later.
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