Deloitte: VAT rate increase 'will not raise predicted money'

Financial services company, Deloitte, have said the Minister for Finance's 0.5% increase in the standard VAT rate to 21.5% may not raise the sums forecasted.

The increase in the VAT rate would impact on consumer spending and increase costs to businesses without an obvious gain to the Exchequer, it was predicted.

Mr Aidan Fagan, Tax Partner at Deloitte said: "The standard VAT rate has been increased from 21% to 21.5% and this is very unwelcome. Arguably, an increase in the VAT rate in time of negative growth simply saps business confidence and reduces consumer spending.

"Any gains to the Exchequer may well be negated by the lower spending.

"In addition, businesses will have to cope with the cost of amending their accounting systems."