Britain to cut VAT in Christmas stimulus spree

Business Materials 23 November 2008 18:35 (UTC +04:00)

The government of Prime Minister Gordon Brown is to give nervous British consumers an early Christmas present on Monday, when he is expected to cut Value Added Tax (VAT) in an effort to lift the national economy out of recession, media reports said on Sunday.

The consumption tax is expected to be cut from 17.5 per cent to 15 per cent, as part of a comprehensive fiscal stimulus package to be unveiled by Chancellor of the Exchequer Alistair Darling, Britain's finance minister, dpa reported.

Such a tax cut is expected to cost the government some 12.5 billion pounds (18.5 billion dollars). In total the government will support the national economy to the tune of at least 15 billion pounds.

The economic aid package will be presented on Monday as part of Darling's pre-budget report, a statement referred to by the Guardian newspaper as the most important financial announcement of the Labour party's eleven years in power.

Tax cuts for the poor and tax relief measures for small and medium businesses are also expected.