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Trade News Archive 2009 January
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5th January 2009
Lib Dems slam VAT cut
The effectiveness of the 2.5 per cent temporary reduction in the rate of VAT has been called in to question by the leader of the Liberal Democrats.
Chancellor Alistair Darling announced the cut - from 17.5 to 15 per cent - in November, as part of the government's plans to revive the flagging economy by boosting sales.
However, the measure has received stinging criticism from many quarters, with most feeling that the savings are too small to make any real difference to cash-strapped consumers.
Adding his voice to the choir on BBC Radio 4's Today programme, Lib Dem leader Nick Clegg branded the £12.5 billion measure an "expensive failure" which is not encouraging shoppers.
"We would use all of that money for a green investment programme, insulating every school and every hospital in this country, and installing smart meters in every home," he added.
Last month, the Federation of Small Businesses warned that the VAT cut could cost retailers heavily in the coming months, as many will have paid full tax on their current inventory, meaning that the 2.5 per cent is coming straight from their own pockets.
(c) 2009
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