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Wednesday, January 05, 2011
Consumers across Europe are facing increased prices as a result of a fresh wave of Value-Added Tax increases introduced in the new year, in the UK, Switzerland and five other countries.
According to TMF VAT specialists, countries implementing high rates will see prices increase by 1-2%, and there will be an increased potential for VAT fraud.
Among the countries hiking their rates, the United Kingdom increased its rate by 2.5% to 20%, Switzerland by 0.4% to 8%, Portugal by 2% to 23%, Poland by 1% to 23%, Slovakia by 1% to 20%, while Israel withdrew a proposed 0.5% cut.
According to TMF, these hikes will be to the detriment of fragile consumer confidence, already at low levels in most economies with the perceived potential of a double-dip recession looming.
TMF added:
“The UK’s GfK Consumer Confidence figures for December 2010 recorded a twelve month low. The equivalent German indicator still remains relatively upbeat; the Germans moved their VAT rate up 3% back in 2007, missing the start of the credit crunch. Ireland has scheduled two VAT increases in 2013 and 2014 to take its VAT rate from 21% to 23%. This was a condition of the ECB-led bail out package. At the end of December 2010, the Finnish Ministry of Finance indicated that it would like to increase its VAT rate to the EU maximum of 25% to fund income tax cuts.”
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