VAT to be cut to 15 percent

It looks like Brown will cut VAT from 17.5% to 15% – the lowest the EU will allow. This would be the crux of Monday’s recession budget. The move costs £12.5bn and the idea would be to get retail sales moving, then jack up VAT later. The threat of the increase, of course, being the point of the stimulatory push. And put VAT back up to what? Robert Peston has speculated a 22.5% level. Crucially, it also seems the deficit will be £120 billion a year by 2010-11. The other bits and pieces include £5bn projected efficiency savings (but after the election, natch). The wee basic rate taxpayer rebate – designed to atone for his 10p tax debacle – will also last another year as suspected and the Met Office may be flogged.

P.S.
The temporary VAT cut, of course, is what Ken Clarke outlined to The Times. Good to see Tories making policy again, at least in part.