=(15/17.5)*100

The BBC got it right; the Daily Mail, as you’d expect, got it wrong.

VAT has been cut by 2.5 percentage points, but it has been cut by 14.29%. Prices that previously attracted a 17.5% VAT levy should reduce by 2.13%.

At the end of 2009, VAT will increase by 16.7%, with prices increasing by 2.17%. You do the maths.

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