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rising vat
The government has come out in defence of the VAT increase which came into effect today.
Chancellor George Osborne called it a 'tough but necessary step'
The Labour party has called it the 'wrong tax at the wrong time'.
VAT rises take effect today with the rate increasing from 17.5% to 20%.
The government says the increase is necessary in order to lower the deficit.
The increase will cost households in the middle of the income distribution just under £4 per week or just over £200 a year.
The standard rate of VAT has risen from 17.5% to 20% as the government looks to boost tax revenues to cut its deficit.
Business groups have warned that retailers will be hit by the increase, while opponents of the rise have said the poorest will be hit hardest.
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