Labour Promises Freeze on VAT
The shadow chancellor, Ed Balls, has revealed that his partyís general election manifesto will have a promise not to increase VAT. He stated that there would be a ìclear pledgeî not to do so due to the fact that the tax ìhits pensioners and the poorest hardest.î
VAT was hiked up by the Conservatives from 17.5% to 20% in 2010 when the Chancellor of the Exchequer, George Osborne, announced it in his first budget.
Alongside the pledge, the Labour party have also warned that the Tories are likely to increase VAT again in order to make up for the additional spending cuts they intend to implement if they were to win the general election.
The conservatives have responded by saying that Labour are intending to raise either national insurance or income tax. A spokesperson for the Conservatives stated: ìEd Miliband and Ed Balls have repeatedly said they will raise taxes. It is time that they came clean with the British public about which taxes they will raise- income tax or national insurance.î
Further to this, the Liberal Democrats have argued that they would not have to raise VAT because their deficit reduction scheme, which comprises of tax increases for the wealthy, would balance the books.
Ed Balls made the announcement in Birmingham underneath a slogan advertising ìDonít let the Tories hit you with thisî, in reference to VAT tax. He argued that the increase they have implemented has ended up costing the average family £1,800 across the course of four years.
Mr Balls commented: ìItís now clear the only way the Tories can make their sums add up on their extreme plans is to raise VAT again after the electionî and that history was simply being repeated.
He went on to state: ìThe extreme cuts to public services like police, defence and social care under these plans would be so deep theyíd be almost impossible to achieve, even for this chancellor.
ìThe Tories have also made £10 billion of unfunded tax promises- which they have still not told us how they will pay for. Thatís why people will conclude that to make their sums add up the Tories will end up putting our NHS at risk and raising VAT again.î
The shadow chancellor argued that they could make this pledge because it had all been accounted for through the coordinated introduction of levies such as the mansion tax and raising income tax for the highest earners to 50%.
He proudly declared: ìSo, today, I can announce a clear pledge to the British people. The next Labour government will not raise VAT. And we will not extend it to food, childrenís clothes, books, newspapers and public transport fares. We will not raise VAT because itís the tax that hits everyone. Itís the tax that hits you every day.î