The Observer reports Alistair Darling us expected to cut VAT from 17.5% to 15% for one or possibly two years. The government’s deficit will balloon to way above £100bn next year, but the Treasury hopes to reassure the City about the long-term health of the government’s finances by announcing detailed plans to increase taxes and squeeze public spending, once the recession is over.

I’d like to see the reduction made permanent, indirect taxes always fall heaviest on the poorest in society moving tax from indirect to direct taxes would be a great boost for low-income families.

Hat Tip: Liberal Conspiracy.