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VAT rise is ‘not temporary’, says Osborne

 

Chancellor George Osborne has signalled that the new 20% rate of Value Added Tax (VAT), which comes into effect on 4 January, will be made permanent.

 

Speaking to The Spectator magazine, Osborne said the increase from 17.5% was a ‘structural’ change.

 

‘The VAT rise is not temporary. It can't be,’ he told journalists. ‘We are talking about a totally different scale of revenue, and the VAT rise is a structural change to the tax system to deal with a structural deficit.’

 

The move, which is expected to boost the Treasury’s coffers by £13 billion, could cost the average UK household around £225.

 

‘Once we can bring some stability to the public finances, we can look at reducing the tax burden on people,’ Osborne continued. ‘But it is a complete mirage to cut taxes one year, then have to borrow the money and put up the taxes later to have to pay for that borrowing.’

 

However, the Chancellor did indicate that the 50% top rate of income tax would not be a permanent measure.