Daily View: VAT rate rise
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Commentators discuss today's increase in VAT from 17.5% to 20%.
The Chancellor of the Exchequer :
"I think a higher income tax or higher national insurance... would have a greater impact on work incentives, on the competitiveness of the British economy, they would potentially cost more jobs. I think the measures we're taking will increase employment because they will install a confidence that Britain is on top of its deficit."
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his alternative ideas to the VAT rise:
"Instead of raising VAT and national insurance this year, the government could introduce taxes on carbon and financial transactions next year. And it should levy a tax on land values. Since all the land in Britain is worth some £5 trillion, an annual levy of 1% could raise £50bn a year - without depressing economic activity, because land is in fixed supply: central London can't be spirited away to a tax haven.
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"As well as preventing property bubbles (and busts), a land tax would be fair. A mere 160,000 people (mostly hereditary landowners) own more than two-thirds of Britain - and the value of that land increases not through their own striving, but through that of others."
Political blogger another alternative to increasing VAT:
"There are many ways the government could have avoided hiking VAT and stuck to their pre-election plans. They could have cut spending a further 2% rather than the mere 3.3% they are planning to shave off spending. The best solution to unfunded over-spending is to reduce spending, not raise taxes."
that neither the Tories nor Lib Dems are justified in breaking their promises not to increase VAT:
"Both parties have since attempted to justify the VAT rise on the basis that 'things were even worse than we thought'. But this claim does not bear scrutiny. The Lib Dems and the Tories were fully aware of the size of the budget deficit and, just ten days after the coalition was formed, the deficit was revised downwards from £163.4bn to £156bn, having previously stood at £178bn. The VAT rise was a political choice, not an economic necessity."
The Ed Miliband's attack on VAT rise is "hard to stomach":
"Any doubts that the Labour leader is a shameless political opportunist were laid to rest with his claim that this is 'the wrong tax, at the wrong time'. Yet we know, not least from Lord Mandelson's memoirs, that the Cabinet of which Mr Miliband was a member wanted to increase VAT - not once, but twice, in November 2009 and March last year - only to have the move vetoed by the then prime minister. Was that the right tax at the right time? Perhaps the Labour leader will tell us."
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