Tories refuse to rule out VAT rate increase

Date: 10th August 2009

The rate of value-added tax (VAT) in the UK could be raised to 20 per cent within days of a Conservative general election victory, it has been suggested.

While the opposition has long been playing down speculation over possible tax hikes should it come to power, shadow foreign secretary William Hague has reignited the stories, explaining that, given the current state of the economy, such a move could not be completely ruled out.

Speaking to Sky News, Mr Hague said: "There are no plans in existence in the Conservative party for such a VAT rate and you can't ask George Osborne to write the 2010 budget now, given the shocking state of the nation's finances."

These comments follow on from Conservative Party leader David Cameron's recent claims that it would be "irresponsible" for him to rule out the possibility of tax cuts in the future.

According to figures cited by the Guardian, increasing the rate of VAT to 20 per cent would generate an extra £10 billion for the Treasury, compared to the £5 billion likely to be generated through the government's anticipated raise to 18.5 per cent.