Yesterday Alistair Darling, the Chancellor of the Exchequer released the government’s pre-Budget report cutting VAT and taking UK borrowing to its highest level ever. It is hoped the move will help the UK during the current economic climate and save it from a long and drawn out recession.
VAT is to be lowered to 15% from 17.5% from December the 1st, with the duty paid for Tobacco, alcohol and fuel set to rise to offset the tax cut. Top earners will lose out as well, with tax and national insurance contributions rising.
Mr Darling stated that “exceptional measures†were needed to stabilise the economy, with the Conservative shadow chancellor George Osborne accusing Alistair Darling of “bringing this country to the verge of bankruptcy†by nearly doubling the national debt.
Mr Osborne went on to say that the government was creating “a huge unexploded tax bombshell timed to go off at the time of the next economic recovery”.
The Liberal Democrats also argued that a cut in VAT would not boost consumer spending, with treasury spokesman Vince Cable saying “it would be much more sensible to put money directly in the pockets of low paid workers by cutting their income tax”.
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