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VAT rise kicks in to add to the high street challenge

Simon Quicke

The chancellor George Osborne has described the VAT rise as a permanent structural tax countering those hopes that, given the ongoing tough economic environment, the government might reconsider the changes introduced today.

VAT has risen by 2.5% to 20%, the highest level it has ever been, as of midnight last night and will start to be felt in the prices both consumers and businesses pay for IT products and services.

Speaking on BBC Radio 4 this morning Osborne responded to questioning about the prospect of a u-turn on VAT by pointing out the deficit needed tackling and changing the tax was not something that had been done without long consideration.

High street retailers have been voicing their concerns about the VAT rise coming on the back of a weather impacted winter and at a point where there is still caution in consumer spending.

In his New Year's message the prime minister David Cameron warned that the year ahead would be "difficult".




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