BUDGET: VAT to be increased to 20 per cent
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Chancellor George Osborne has revealed that the rate of VAT is to be raised from 17.5 to 20 per cent in January 4, 2011.
Osborne says the hike will create £13bn worth of extra revenue, claiming that “the years of debt and spending make this tax unavoidable”.
A number of items will remain exempt from VAT such as food and children’s clothes, despite reports that it may be scrapped for these items ahead of the emergency Budget.
VAT was introduced in 1973 and has largely been set at 17.5 per cent since 1991. There was a temporary reduction in 2009 to 15 per cent but was restored to 17.5 per cent in January 2010.
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