VAT may eventually rise to 20%, exceeding the 17.5% rate due to be restored on 1 January 2010, experts have warned ahead of the pre-Budget report to be delivered by chancellor Alistair Darling on 9 December. 'An increase is likely to happen, but when?' said George Bull, head of tax at Baker Tilly. 'We may well see a further rise in VAT. It's easy to collect and relatively painless,' he said. Bull pointed to the US where he said the introduction of VAT was being taken seriously to replace the country's sales tax, which is 'hidden' until customers pay. He also said there were likely to be more goods added to the 5% rate, which at present covers such items as domestic fuel and solar panels. Bull said: 'My guess is that as people have got used to the 2.5% step, so VAT could be increased to 20%.' But mid-tier firm BDO believed the chancellor could reduce the VAT on residential property repairs to the lower 5% or even the nil rate to help the struggling construction sector. On green taxes, Bull said the results of a survey, as yet unpublished, revealed that 62.5% of professionals approved of a rise in environmental taxes. Such rises would suit the government. 'This would play to the Copenhagen agenda very nicely,' said Bull. BDO said the chancellor may also use the green agenda to target tax increases on, for instance, air travel and high polluting cars.