Reeves’ tax grab on taxis highlights the absurdity of the VAT system and raises the question of whether VAT should be levied more consistently across goods and services, says Ben Ramanauskas

It has been reported that Rachel Reeves will announce at the Budget that taxi journeys will be subject to VAT. This has drawn criticism from many commentators and has already been dubbed as a ‘taxi tax’.

It is clear why the Chancellor feels the need to do this. Despite her last Budget increasing taxes by £40bn and public spending by £70bn, lacklustre growth and rising borrowing costs mean the government now needs to scramble around to find another £30bn in order to plug the deficit and calm the already nervous gilt market.

Although the Chancellor is doing this for fiscally dubious reasons, her latest tax grab does highlight the absurdity of the VAT system and raises the question of whether VAT should........

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