Bad News Blues For British Consumers….Osborne Increases U.K. Value-Added Tax Rate to 20%
Posted By thestatedtruth.com on June 22, 2010
June 22, 2010
 By Andrew Atkinson
June 22 (Bloomberg) — British Chancellor of the Exchequer George Osborne increased the value-added tax rate to 20 percent from 17.5 percent in the first permanent change to the levy on sales of goods and services in almost two decades.
“The years of debt and spending make this unavoidable,†Osborne told Parliament in London in his emergency budget today as he announced a package of spending cuts and tax increases to cut the U.K.’s record deficit.
The rate will increase from January and produce more than 13 billion pounds ($19 billion) a year of extra revenue by the end of this Parliament in 2015, Osborne said. “That is 13 billion pounds we don’t have to find from extra spending cuts or income-tax rises,†he said.
The VAT increase dwarfed other revenue-raising measures in a budget that sought to all but eliminate a deficit that reached 11 percent of gross domestic product last fiscal year.
The tax generates about 15 percent of total government revenue and retailers say the rise may dampen consumer spending as the economy emerges from its worst slump since World War II.
“We understand that the budget deficit needs to be tackled but we think the focus needs to be cutting public spending over tax rises,†Krishan Rama, a spokesman for the industry lobby group, the British Retail Consortium, said in a telephone interview yesterday. “What we’re concerned about is that the recovery at the moment is very fragile and consumer confidence is also fragile, so we don’t want something to fracture that.â€
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