The Federation of Wholesale Distributors is warning that the extension of VAT on to basic foodstuffs is a real danger, following new reports on the Chancellor's plans for the Budget on April 17. Speculation began when the International Monetary Fund suggested eliminating VAT exemptions on food and children's clothes would help the government raise cash without direct tax increases. Such a move would also bring the UK into line with the other members of the EU, all of which tax food. FWD director general Alan Toft warned despite promises that Labour would never extend VAT on to basic foodstuffs, Railtrack type u-turns were possible, and he called for a copper-bottomed guarantee on the point from the Treasury. Toft said: "If VAT were extended to the basics, it would seriously disadvantage the independent retailer. The superstore corporations would be adding VAT to a packet of tea retailing at 85p whereas the independent would be adding the same percentage to a retail price of 93p. "The federation is anxious that a Euro enthusiast such as Tony Blair will seek to raise his continental profile by bringing the UK into line with the rest of the EU with VAT on food. "The chattering classes in the media over the weekend raised the subject again on the grounds that the Treasury will avoid increased duties on petrol, tobacco or alcohol because these are now so high." Martin Paterson, deputy director general of the FDF, said: "The loss of zero rating would be bad for consumers and bad for the industry. "It would seriously affect lower income families who buy a greater proportion of these goods, and make it more difficult for them to maintain healthy and nutritious diets." VAT rates in the rest of the EU vary with some charging less for food than other goods ­ such as Italy with rates of 20% and 4% ­ and others such as Denmark were everything is rated at 25%. Toft said in a typical wholesale company about 40% of turnover would not be subject to VAT, with the rest accounted for by tobacco, alcohol and impulse products. {{NEWS }}