The Treasury was last night forced to deny that Alistair Darling was drawing up secret plans to raise VAT to 18.5% in the next parliament in an attempt to fill the black hole in the government's finances created by the recession and the massive stimulus package announced on Monday, The Guardian reports.
Officials insisted that a document outlining an intention to raise VAT to a record rate had been put on a website by mistake, and the chancellor had rejected the idea before Monday's pre-budget report. Details of the proposed change - which would infuriate retailers and intensify the political row about tax - emerged in online background notes provided by the Treasury to explain the temporary VAT reduction announced in the PBR. The web document reads: "The proposed changes will reduce this [the VAT rate] to 15% from December 1 2008 until the end of 2009. The standard rate will then retu...
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