In last month’s report we mentioned the possibility of the rate of VAT staying the same after the General Election took place on the 6th May. However in the interim there have been other reports which have taken this idea in a very different direction.
Experts have stated that they believe the UK rate of VAT could rise by 1.5% to 19% after the Election has been decided. This would apparently be one of the best ways to try and tackle the national debt, which has increased to huge levels since the recession battered the country – along with the rest of the world.
However on the 7th May – the date on which this article was written – the UK is facing a hung parliament, with no party gaining an overall majority. The majority is needed to be able to form a government, and without it we are left with plenty of uncertainty over what will happen next. Who will try and form a coalition government and what effect will it have on policies of all kinds?
It seems that any potential increase in VAT may not happen as soon as some of the experts thought it would. The delay in finding out who our next governing party and Prime Minister will be means that the rate is likely to stay at 17.5% at least for the foreseeable future. Hopefully firm decisions will be made as soon as possible for the good of the country, but there are differing opinions on whether the Tories or Labour should be part of a coalition government.
So where we may have been facing a rise in VAT fairly quickly, the idea of this becoming a reality very soon has definitely changed. Needless to say the national debt needs to be tackled quickly and efficiently, and a rise in VAT would go some way towards doing this. But if the parties are undecided about a coalition and the decisions are delayed because of it, who knows what effects this could have both short and long term?
For the moment it is too early to say what will happen next. We must just wait to see what agreements could be made and where they will lead us in the future. But one thing is certain – whatever happens it will have a profound effect on our country, and possibly on the rate of VAT we pay as well.