Think-tank suggests broadening VAT
05 March 2010A think-tank report suggests politicians should consider imposing VAT on food, household gas and electricity, and children's clothing.
The change would make the tax simpler, getting the UK in sync with other countries, according to Reform.
VAT returned to 17.5 per cent this year, after its reduction to 15 per cent in December 2008.
Between 50 to 60 per cent of average household spending is affected by the VAT.
Three other EU countries apply a zero rate to food and two others apply a zero or reduced rate to children's clothing.
In addition, Reform said adjustments to personal allowances would also make the tax less complex.
It would increase revenue by £8.3bn in 2011-12 and £8.4bn in 2012-13.
Households with incomes of over £17,000 would see a tax increase with the vaster VAT and those earning more than £105,000 would see a tax reduction.
@reformthinktank
