TaxCorporate TaxVAT rise blocked by PM

VAT rise blocked by PM

Gordon Brown is reported to have convinced Alistair Darling to raise national insurance instead of VAT

Alistair Darling wanted to increase VAT to a much higher rate but was blocked
by the prime minister.

Cabinet sources told
The
Guardian
the chancellor wanted to increase VAT to more than 17.5% but was
convinced by Gordon Brown to raise national insurance by 0.5% instead.

Follwoing the announcement this week shadow chancellor, George Osborne, said
the rise in NI is a tax on jobs.

The
Guardian
calculated that a 1% rise in NI should raise £4.48bn for the
country in a year. In contrast a 1% rise in VAT will generate more at £4.8bn.

The Tories claim the impact of the NI rise to the NHS will increase by £446m
in employer contributions alone.

It is estimated returning VAT to its original rate of 17.5% on 1 January will
restore £12bn in revenues for the country.

Further reading:

PBR
09: Retail ‘disappointed’ over end of 15% VAT rate

PBR
09: Cable attacks “unfair” and “optimistic” pre-Budget report

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