ABSTRACT
In 1980/1 the gross domestic product at factor cost was £231 ,082m., so that the revenue from VAT represented some 4.8 per cent and the excise duties some 4.3 per cent of the Money GDP. Variations in these indirect taxes could thus constitute a very significant regulator of demand. A 10 per cent variation of all these rates of duty above or below their ruling levels would thus have represented a variation of plus or minus some 1 per cent of Money GDP; and there is no reason why variations in the rates of duty should be so strictly limited. In the case of VAT, for example, a 10 per cent change would represent a change of only 1.5 percentage points on a VAT rate of 15 per cent (i.e. a variation between the limits of 16.5 per cent and 13.5 per cent). Indeed, as is explained in Section 3 below, there are already existing powers for the use of V AT as a regulator that allow a 25 per cent variation of the existing rate (i.e. a variation between 18.75 per cent and 11.25 per cent).
