by business editor Trevor Sturgess

Vat could go up again, a Kent tax expert has warned.

Paul Hodge, tax partner with Baker Tilly in Tunbridge Wells, said there was nothing in European Union law to prevent a member state raising Vat to whatever level it wanted.

However, it could not go lower than 15 per cent.

"So Member States are free to set a VAT rate which they believe is appropriate for them at any given time, bearing in mind their respective financial positions," he said.

"Future governments or even the current coalition could certainly consider a further increase."

The controversial 2.5 per cent hike has proved a political hot potato, with Chancellor George Osborne defending the decision by claiming it was the fairest way to raise more revenue.

But Labour leader Ed Miliband accused the Chancellor of making the wrong decision at the wrong time.

The Federation of Small Businesses warned it would hit many smaller enterprises.

But Mr Hodge said that while the rise was bad news for consumers, it could have been much worse.

"Both Portugal and Poland increased their rates to 23 per cent and there are three Member States with a standard rate of 25 per cent.

"To put this in perspective, there are only seven Member States with a lower Vat rate than the UK's."

He warned that the Government might also look at cutting the "relatively long" of zero-rated goods such as food, children's clothing, books and newspapers.

"Although the UK is allowed to keep its zero rate, it is not required to do so.

"Any Government can decide to levy Vat on the items on this list, should it deem the revenue-raising opportunity too good to miss."