In an interesting move, the Government’s spending watchdog has added economist Rita de la Feria to its advisory panel. De la Feria, known for her critical stance on Brexit and opposition to VAT cuts, brings her expertise in VAT and its impact on consumers and businesses to the Office for Budget Responsibility (OBR). The OBR’s role is to estimate how changes in tax and spending affect the economy, tax receipts, and the budget deficit.
De la Feria has been vocal about her disappointment with Brexit, stating that it is a sad day for her personally and her family, especially for young British people who will not have the same rights she enjoyed as a product of free movement. Additionally, she has expressed her opposition to VAT cuts for specific goods in tweets reported by the Guido Fawkes blog.
De la Feria’s research suggests that lower VAT rates for individual products may lead to higher retailer profits instead of the full tax cut being passed on to consumers. She has also proposed widening the tax base and even sees Labour’s proposal to apply VAT to private school fees as a potential Brexit benefit.
Last year, the OBR faced increased political attention when then-Chancellor Kwasi Kwarteng decided against publishing analysis from the watchdog alongside his mini-Budget. Financial markets interpreted this as a lack of interest in fiscal balance amid significant tax cuts and spending pressures. Liz Truss later criticized the OBR for its stance on tax cuts, arguing that it has become a driver of fiscal policy due to its influence over projected impacts of tax and spending decisions.
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