A post-election rise in VAT is a possibility after the Chief Secretary to the Treasury, Liam Byrne was forced to retract a statement ruling out VAT or any other tax rises.
According to the Mail Online, the redaction was forced after the Bank of England stated that Britain still lacks a ‘credible’ plan for dealing with budget deficits. When asked if he could still claim that taxes would not rise, Byrne responded: “No. I mean, Chancellors reserve the right to come back to tax matters at every budget.”
The Mail also alleged that both Labour and the Conservatives are considering a VAT rise to 20 per cent, bringing it into line with European averages.
“The deficit now looks set to be around 12 per cent of GDP this year, which is unsustainable in the medium term,” said the deputy governor of the Bank of England, Charlie Bean. “All political parties recognise the need to put in place a credible plan for the consolidation of the public finances over the medium term, even if their preferred routes to doing so differ.”
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