A VAT rise may be no laughing matter, but it’s better than the alternatives

Martin Vander Weyer’s Any Other Business

And so to VAT — an opening that I realise sounds about as enticing as a job ad for a shorthand typist in the Prime Minister’s office. Frankly, I doubt even Bob Monkhouse had a decent gag about VAT in his repertoire. But like many things that are not funny — Jonathan Ross hosting the Bafta awards, for example — tax on consumption is an inescapable fact of modern life. So, having ducked the topic last week in favour of high-class name- dropping, I’ll do my best this week, prompted by a Conservative statement that ‘We have absolutely no plans to increase VAT’. That means you may be pretty sure they have: in modern politics, ‘absolutely no plans…’ is a holding position that just happens to be missing its other half: ‘…actually written down anywhere that you’re likely to find them’.

But should we be angry about the prospect of paying an extra two and a half per cent to Chancellor Osborne on most of our purchases, because it will stoke inflation and give small businesses another kick in the nuts as they stagger out of recession? Or should we welcome it as a relatively painless substitute for bigger direct-tax increases and deeper cuts in public services? Indeed, is it possible, like Private Eye’s Revd J.C. Flannel on the subject of the H-bomb long ago, to be ‘in a very real sense, both for and against’ a VAT hike? In order to guide you on such an arcane topic, I’ve put myself through a weekend Teach Yourself VAT tutorial that has left my brain spinning — highlighting one reason why chancellors like messing around with this method of money-raising: almost no one who’s not an HMRC official or a convicted fraudster actually understands how the damned thing works.