Britain is to increase value added tax (VAT) to 20 per cent and introduce a bank levy from next January as part of measures to tackle the vast budget deficit over five years, according to dpa. The radical measures were announced in an emergency budget presented by the Conservative-Liberal government just six weeks after it came to power. George Osborne, the Chancellor of the Exchequer, said tough and unavoidable measures were necessary to ensure that the national budget would be "in balance" by 2015/2016. According to the latest estimates, Britain's annual budget deficit stands at 155 billion pounds (228 billion dollars). Of that, 74 billion pounds have been identified as the structural deficit - the part of government borrowing that does not fall when tax revenue rise. "This is a budget that pays for the past and plans for the future," said Osborne. He said VAT would go up from 17.5 per cent to 20 per cent from January 4 next year, generating an estimated 13 billion pounds of revenue per year. Britain will also introduce a levy on banks to claw back bailout money from January 2011, a measure which Osborne said had been agreed with his counterparts in Germany and France. The levy would raise 2 billion pounds a year. -- SPA
