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UK Mulls VAT Cut to Spur Economy

 

British shadow chancellor, Ed Balls, is calling for an emergency temporary cut in the VAT to put more money directly into people's pockets and boost consumers feeling the squeeze from rising prices and taxes.

While many policymakers disagree, Balls said the economic evidence so far was pointing in his direction, arguing: "Looking at growth across the EU over the last six months compared to the previous six months, we have gone from the top end of the economic growth league table to fourth from bottom, with only Denmark, Greece and Portugal below us.

Over 150 nations impose a value added tax, (VAT) at each step of the manufacturing process. The tax is invisible, paid for by consumers and can add from 5% to 25% to the cost of goods.

President Obama refused to rule out the imposition of a VAT in the US last year as a way to reduce the U.S. budget deficit and pay for his new healthcare program.




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