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Any VAT changes should be 'smart'

A leading UK retailer has called on the government to structure any rise in VAT in a "smart" way.

Instead of an across-the-board rise above the present standard rate of 17.5 per cent, the Chancellor should look at charging VAT on a broader range of products, said Ian Cheshire of Kingfisher, the group that owns B&Q.

Many analysts expect that VAT will rise at some point in the future, bringing it closer in line with the European average of 20 per cent and raising billions in extra government revenue.

Mr Cheshire said: "Rather than reach for the default switch of increasing the standard rates, we should perhaps look at how the tax burden falls and take this opportunity to think about a slightly smarter form of tax - what we want to encourage and what we want to discourage."

He pointed out that, while junk food attracts sales tax, there is no VAT charge on sugar.