Tesco FD warns against VAT rise

The FD of supermarket giant Tesco has called for the government to freeze VAT
at 17.5% because the expected rise to 20% would damage the “fragile” economy.

Laurie McIlwee issued the warning as Tesco unveiled disappointing
first-quarter results in a presentation to the City.

“The recovery is happening but it’s fragile and therefore the
balance is important,” said Laurie McIlwee, Tesco’s finance director.

“VAT is going to be part of the austerity package but it is a question of
you do it. The best thing would be to wait a bit.”

However, advisers have said the increase would be an obvious revenue-raising
move for a government because it would generate about £12bn of revenue.

Putting VAT on food would be “nonsensical”, McIlwee added.

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