There is always an argument for increasing VAT but it is one of the flaws in the plan that the Government is taking individual decisions without restructuring. Again, it is as with the case of public service reform. The Government should be restructuring because it is by restructuring that it will get the economy moving again. When it decided to increase VAT by two points, it should have reduced the lower VAT rate of 13.5%. If the standard of VAT is increased by 1% and the 13.5% rate is reduced to 10%, there would still be some €200 million to €250 million going into the Exchequer. The Government should have used the opportunity to reform VAT rather than just state we are taking the increases for revenue collection.

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