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Will VAT rise in the short term?

There is ever-growing speculation that the UK government is set to increase VAT from 17.5% to 20% as a means of partially funding the requirement for an additional £50 billion in tax revenues. At the moment it is very much a guessing game with the UK government unwilling or unable to give too much away but there is no doubt that UK taxes will increase in the short to medium term and public-sector investment will be slashed.

Many experts believe that not only is there a need for a VAT rise but we could also see an increase in income tax rates which would likely be targeted at the top end of the income scale. It is only now that the coalition government is starting to find it's feet that the full scale of the economic collapse in the UK is there for all to see. Rumours and counter rumours have been circulating for some time but now we are at the business end of UK government and the Conservative/Liberal Democrat alliance will need to work quickly to restore faith and confidence in the UK economy.

Compromises will need to be made but UK businesses and consumers will feel pain in the short term but hopefully prospects for the long-term should improve.

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