How to Boost the Treasury's Coffers by £24 billion
Time to be bold on VAT reform
It didn’t receive too much attention during the Truss-Kwarteng mini-budget as it was overshadowed by the other bonkers stuff, but the plan was to reintroduce VAT free shopping for tourists in the UK. Like the vast majority of the proposals in the mini-budget, it was very sensibly reversed by Jeremy Hunt.
There has been a concerted effort by big businesses, newspapers, and the Mayor of London to get Hunt to reverse the reversal and bring back VAT free shopping. I wrote an opinion piece for City AM this morning setting out why this would be a bad idea and why Sunak and Hunt are right to stick to their guns. Feel free to give it a read (link below).
If you’re too lazy to read it then essentially it would cost quite a lot of money (approximately £2 billion a year), the main beneficiaries would be stores like Harrods, and would add even more complexity to our VAT system.
In an ideal world we’d see the Chancellor being even bolder in his Budget next week by scrapping all the different rates and exemptions and instead levy a single flat rate of VAT on all goods and services (and yes I am including food and children’s clothing). A flat rate of 17.5 per cent would bring in a whopping £24 billion each year – that’s a lot of teachers, nurses, and soldiers. This would obviously increase the cost of living for people but the added revenue could be used to provide targeted support for the most vulnerable in society.
Thanks as ever for reading and I’ll no doubt write an actual blog post at some point this week.