Conservatives deny considering plan to hike VAT to 20 percent | Top News | Reuters

LONDON (Reuters) - The Conservative Party, favourite to win a national election to be held this year, rejected a newspaper report on Saturday which said it was considering raising the sales tax VAT to as high as 20 percent.

"We have absolutely no plans to increase VAT," a party spokesman told Reuters, without giving any further details.

Raising taxes on consumption hits the poor the hardest (relatively speaking). I guess that is why such a tax hike is considered more serious then raising taxes on high incomes or wealth.

This is not to say that there should be no taxes on consumption, only that the damage to the poor should be offset with raised subsidies and lowered income taxes on the lowest incomes. Such a package would then land the tax burden on the middle and rich segments who can better afford it, but I guess that would be unserious.

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