VAT ‘offset’? No just a tax rise via the backdoor

Everyone in the UK will be aware that the ‘pre-budget report’ was released this week. Slightly oddly named considering it contained more headlines the most full Budgets.

One of the things mentioned by every media outlet I have seen is the ‘offset’ increase in Duty for Alcohol and Tobacco to counter-balance the temporary decrease the in VAT.

The key word there is temporary. It appears next to the VAT cut, but not next to the increase in Duty to offset it.

So I did some poking around and came across this document: (pdf)

From page 25 (PDF page 30), paragraph 2.49:

“2.49 As set out in more detail in Chapter 5, alcohol and tobacco duties will be increased to offset the effects of the temporary reduction in VAT. Maintaining these increases after December 2009 will further support fiscal consolidation.”

That is no offset! That is a future tax rise. At the point VAT goes back up, this Duty rise will stop being a tempoary offset and start being an increase in the tax/duty we pay.

My point is not the rise in duty, but the way it has been presented by the Government.

Why have none of the papers and media outlets picked this up? Or have they, let me know!


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