Laura Kuenssberg grills Rishi Sunak on taxation rise
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But pro-Brexit campaigner Jayne Adye has warned the Government must take a bold approach rather than “plodding along” in accordance with the bloc’s “status quo”. Ms Adye, director of Get Britain Out, was speaking at a time during which the nitty-gritty of Britain’s ongoing relationship with the bloc is increasingly under the microscope.
The controversial Northern Ireland Protocol, under which the region effectively remains a part of the EU’s single market, is at the forefront of the debate – but Brexit Minister Lord David Frost has made it clear he increasingly wants Britain to move away from alignment with EU red tape – particularly in the area of vat-added tax (VAT), which applies to a wide range of goods and services.
Ms Adye said: “The Government has already accepted cutting VAT is a good idea for encouraging investment in industry and consumer spending.
“Just last year, to encourage people to go out and spend money, the Government temporarily cut VAT in the hospitality sector from 20 percent down to five percent.”
Nevertheless, despite the success of the scheme in delivering a timely boost to the economy during the pandemic, the Government still insisted such reductions were temporary measures.
Ms Adye added: “Ever since the 2016 EU Referendum and before then, Get Britain Out and other pro-Brexit campaigns have produced report after report identifying areas of EU regulation from which the UK should free itself.
“However, despite this plethora of information and experience at their disposal, those in Whitehall have shown no interest in actually implementing meaningful change.
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“VAT compliance cost an average company four percent of their turnover, Ms Adye pointed out.
She explained: “This is a significant amount for smaller businesses desperately trying to stay afloat in the current economic climate – yet the Government continues to sit on its hands.
“It seems content with a system which as recently as 2017, was spread across 42 Acts of Parliament and 132 statutory instruments, with many more no doubt added throughout the pandemic.
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“How is such a complicated system sustainable?”
Ms Adye acknowledged Chancellor Rishi Sunak’s probably motive in resisting calls to scrap VAT was to “refill the Treasury’s coffers after the pandemic”.
However, at a time when interests rates are at record lows, the focus should be on lowering the cost of living and helping the country reach optimum growth as the nation made its way in the wider world, in line with Mr Johnson’s Global Britain vision, she suggested.
Ms Adye said: “In the tax year 2019-2020 (the most recent year available) the UK had a VAT Gap of £12.8billion (the difference between the actual amount of VAT collected and the theoretical tax liability), equating to 8.4 percent of potential VAT revenue.
“Is this really a hole in our budget which is not worth working to eliminate?
“Instead of choosing to simplify our tax system, we continue to plod along, happy to stay aligned to what became the norm under EU regulations.
“Too often the Government has ignored chances to break away from the EU’s status quo.”
She asked: “Is this just about not wanting to rock the boat – or just being too lazy to make changes and come up with our own ideas?
“The tax system in the United Kingdom needs to be reformed, and the Government should either abolish VAT, or bring in VAT reform if we are to get the best from Brexit.”
An HMT spokeswoman told Express.co.uk: “Since we left the EU, we’ve taken advantage of our new freedoms to reform VAT – including zero rating women’s sanitary products and collecting more VAT from large online retailers. We keep all taxes under review.”
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