The United Kingdom’s sales tax – a value added tax – will rise to 20 percent by 2011, as the new government attacks the soaring budget deficit, top economists say.
In a BBC survey of 28 independent economists who help the government with its forecasts, 24 expect the VAT to increase during the 2010-11 parliamentary recession, The Times of London reports.
Most predict the tax will reach 20 percent by the end of next year, up from 17.5 percent now.
The U.K. budget deficit totaled 11.4 percent of GDP last year, not far from the 13.6 percent registered by beleaguered Greece.
A new Conservative government just took office in Britain, with the Liberal Democrats as its partner.
Both parties said during the campaign that they had no intention of boosting the VAT, while declining to rule out an increase.
Business leaders say a hike would hurt retail sales.
“A VAT rise to 20 per cent is clearly on the government's mind,” Sainsbury’s chief executive Justin King said, according to The Times.
“We need to know in good time, and there needs to be sensible timing — not in our key trading periods such as the run-up to and in the aftermath of Christmas.”
In the United States, of course, sales taxes are charged at the state level. The Obama administration has begun an effort to raise income taxes, with dividend taxes slated to nearly triple.
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