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Darling’s VAT cut a last-minute decision

The government considered lifting VAT to an unprecedented 18.5%, an
inadvertent publication of an early version of the
pre-Budget
report
documents has revealed.

Chancellor Alistair Darling decided only at the last minute to scrap plans
for the VAT hike in 2011-12, the Financial Times reports.

HM Treasury insisted last night the VAT rise, which would have generated £5bn
a year, was dropped by Darling in favour of a five basis point rise in national
insurance contributions and a new 45% income tax rate on high incomes.

A Treasury official said the two measures together would raise about £5bn a
year and there was no hole in the government’s forecasts for future revenue.

Further reading:

Darling’s rescue plan needs banks on board

Read
the Financial Review story

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