UK defends VAT rise

UK Chancellor George Osborne is defending the increase in the Value Added Tax (VAT), which takes effect today.



The increase from 17.5 to 20 per cent is expected to raise an extra $13 billion pounds in revenue.



Chancellor Osborne has described the move as a tough but necessary step towards restoring the UK's economy.



Osborne says the hike is more progressive than increasing income tax or National Insurance.



However, the labour leader Ed Miliband says the move is misleading and wants Osborne to apologise to voters.



The VAT rise is the second in a year, after Labour Chancellor Alistair Darling restored the 17.5 per cent rate last January, having temporarily reduced it to 15 per cent for 13 months to stimulate the economy during the recession.