The basic VAT tax rate is set to rise from 19% to 20% in the September budget, the Volkskrant and Telegraaf report on Friday. The increase is the most important element of the 2008 budget which has been leaked so far.

As well as the increase in VAT, the Volkskrant claims ministers have agreed on a sharp reduction in unemployment benefit (WW) premiums.
In total, finance minister Wouter Bos will present plans to cut spending by a total €1bn plus tax and premium cuts of €700m, the paper says.
Next year’s budget is based on ‘a solid financial policy’ and shows ‘fine spending power developments’, Bos told reporters late on Thursday.
He was speaking after ministers reached agreement on the 2008 spending plans, which will presented to parliament on September 18.
Bos declined to go into details but sources say the budget includes measures to maintain the spending power of people on the lowest incomes. But other income groups will have between 0.25% and 0.5% less disposable cash next year.
Taxes on petrol, tobacco and alcohol are set to increase to help reduce the budget deficit.
A number of ministries face spending cuts but the education and defence departments will be spared, news agency ANP reported.
The tax break for non-working women is also set to be phased out more quickly than initially planned, ANP said.
The biggest opposition party, the free market Liberal VVD, said ‘hardworking’ people would pay the bill. ‘Almost every tax you can think of is set to rise’, party leader Mark Rutte told ANP.