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Report: Weaknesses highlighted as VAT turns 50

People buying goods should have a ‘free and undistorted choice’ so far as possible Anthony Barber then chancellor of the Exchequer said during a 1972 Finance Bill debate on the introduction of value added tax.

VAT would also reduce uncertainty for producers and traders Barber told MPs. Labour MP Denis Healey (who succeeded Barber as chancellor in 1974) was not impressed. He asserted that the new tax as presented by the government was ‘a fatuous monstrosity a fiesta for form-fillers and fiddlers leaking at every joint with idiotic and damaging anomalies’.

VAT replaced purchase tax and selective employment tax in April 1973 after the United Kingdom joined the European Economic Community. Tax practitioners and academics who have marked the 50th anniversary of VAT expect it to be around for another 50 years despite the UK’s departure from the...

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