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UK VAT INCREASE NEWS |
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2011-01-26 |
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UK 20% VAT Is Permanent, by Jason Gorringe, Tax-News.com, London
Tuesday, January 11, 2011
The UK Prime Minister, David Cameron has confirmed the earlier comments of the Chancellor, George Osborne, that his government regards the 20% value-added tax (VAT) rate implemented on January 4, 2011, as permanent.
Speaking on the BBC's Andrew Marr show, Cameron disclosed that it was the government’s plan to maintain a rate of 20% on goods and services in the United Kingdom, to generate an additional GBP13bn a year as part of a structural review of the UK tax system.
Cameron also disclosed that the government is considering scrapping the 50% tax rate on the country’s highest earners in a decision he conceded would not win the party favour in polls. He explained that recent measures introduced to prevent avoidance would ensure that highest rate taxpayers pay their fair share of tax.
The Prime Minister said that by tackling the country’s debt and making the country more attractive to skilled workers, the government would ensure that confidence remains in the British economy. He said that the regressive nature of the VAT hike would be offset by measures to boost enterprises, which in turn would generate new jobs. He argued that the VAT hike would be more positive for the UK economy, despite its negative effects on consumption and on the retail sector, than an increase in employees’ and employers’ national insurance contributions – as advocated by the Labour Party – describing the opposition’s plan as "perverse". Nevertheless, Cameron admitted 2011 will be a "tough and difficult year" for the UK consumer.
Concluding, he said that his government is supportive of progressive taxation and argued that those on high incomes should pay the most in tax, “not only in total cash terms but also as a share of their income, and that is what the Budget and spending round achieved."
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