Economists are warning the new coalition government may have to impose £50bn of tax rises only months into its tenancy including a hike in VAT.
They now view it as an odds-on probability the coalition will raise VAT to 20% within 18 months, according the panel of economists regularly consulted by the Treasury. However, others warn the VAT increase may be able to raise barely more than a fifth of the revenues required, the Daily Telegraph reports. Jonathan Loynes of Capital Economics warned the Office for Budget Responsibility, the three-man independent committee charged with assessing how much to cut the deficit, could urge the Government to raise taxes by £50bn. This implies a 9.5p increase in the basic rate of income tax wo...
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