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Cutting VAT—hydroxychloroquine for a Covid-ravaged economy

The tax cut worked in 2008 but a repeat success is not guaranteed on a different illness

By Edward Troup  

Photo: Chris J Ratcliffe/PA Wire/PA Images

In 2008, at the height of the financial crisis, the Treasury cast around for ways of using the tax system to provide an immediate fillip to the UK economy. Many options were rejected as being too complex, too narrow or too slow to administer. Only a temporary cut in the VAT rate offered a widespread injection of cash across the broad swathe of consumer spending and retail activity. It did not involve the machinery, complexity and risks of cash grants and could…

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