05 January 2011

VAT Rate Rise

The VAT rate has risen from 17.5% to 20%. The increase has been catalysed by the government who are aiming to cut its deficit by boosting tax revenues.

At the beginning of the summer, George Osborne (chancellor) commented that the hike should, if all goes to plan, raise £13 billion a year by the end of parliament-an amount which would help patch up the deficit.

Those things that are excluded from the rate hike are food, children’s clothing, newspapers and magazines.

Criticisms of the move are aimed at Osborne and the government and they focus on the fact that shops and retail will be severely affected by the changes. Along with this, they comment that those families with the least money are likely to be hit the hardest.

Among those who criticise the plans are labour leader Ed Miliband who believes that now is not the right time to introduce rate hikes-seeing as there are many other government spending cuts which families are trying to cope with. He described the decision as “wrong tax at the wrong time.”

No comments: