VAT, invented in France in 1954, arrived in the UK as a compulsory condition of joining the EEC in 1973 (it replaced the UK's purchase tax) and it will stay long after the 'wrong-colour' passports have gone.
No government in its right mind would ever choose to abolish this stalwart of the tax system, a status earned by the amount it rakes in: £120.7bn in 2016-17, compared with £174.7bn from income tax, £8.7bn from capital gains tax and £4.7bn from inheritance tax in the same year. Often invisible to the payer's eyes, it's largely perceived as fair thanks to a list of exemptions and its imposition on luxury items bought by the rich, who can afford them. Any increases therefore are generally accepted without too much grumbling - as long as the net isn't being widened to include items considered essential not luxury.
So not only will VAT be staying, it might even rise. A 1 percentage point rise in the rate in the UK would bring in a further £6.07bn. Across Europe VAT rates are commonly as high as 25 per cent - if the rate here were to rise to a similar level, in theory the government could bank a further £30bn or so. In reality, though, such a move would have a major impact on consumer spending and so threaten to shrink the government's haul.
But even without the pressure of Brexit, the government is on the lookout for ways of increasing its income, preferably without making anyone squeal too loudly. If it's not VAT's turn, then whose? National Insurance was high up on the list until the chancellor was forced into a U-turn by the fury of the self-employed.
Easier targets include unpopular groups such as landlords - always seen as fair game, they've been stripped of their right to offset finance costs against rental income and been lumbered with higher rates of stamp duty - and high earners, the top 1 per cent of whom pay 27 per cent of all income tax. They've had to give up big chunks of their entitlement to tax breaks on pensions and the personal tax free allowance. Other groups at risk of a raid include tax avoiders (those using unacceptable manipulations of the system) - the chancellor previously said he hopes to collect £2bn from them; tax evaders, assumed to cost the nation more than £11bn a year, and big corporations that are rather good at refusing to be corralled into the tax pen.
Often, though, it's simply easier to make the taxpaying population in front of you cough up even more. And while the chancellor might protest that the government has generously increased the Isa allowance (from £15,240 to £20,000 this year) and helped those living in high-value properties to avoid inheritance tax (never mind that it benefits in other ways from rising house prices), the fact is it's far less painful to forego relatively small amounts of dividend and capital gains tax than it is to, for example, hand back hefty amounts of cash in pension rebates. It's really not that long ago that you could fill up your pension pot with £255,000 in a single year. That allowance is now £40,000 and just £10,000 for some. That may be fair and right, but it may well be cut again, along with entitlement to higher-rate tax relief.
So at the start of a brand new tax year, I would urge all to make it a resolution to use the tax breaks available to you before you lose them for good.
