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Saturday, 3 January 2015

Labour claim that VAT rise has cost families £1,800

On the fourth anniversary of the Tory-led government’s VAT rise, Labour claim that, new figures show that families have paid on average £1,800 more in tax as a result. In January 2011 David Cameron and George Osborne’s decision to increase VAT from 17.5 per cent to 20 per cent took effect.

The Treasury’s own figures show that a 2.5 per cent increase in VAT costs a couple with children £450 a year on average. Over four years, that means these families have paid a total of £1,800 more in VAT. And having raised VAT in this Parliament, Labour point out that the Tories have failed to rule out another VAT hike in the next Parliament to pay for their £7 billion unfunded tax promises.

In the the interest of balance when being interviewed by Andrew Neil on the Daily Politics, Shadow Chief Secretary to the Treasury, Chris Leslie refused a number of times to rule out a VAT rise should Labour win the election. Also when asked at a Q&A the Labour leader, Ed Miliband, said it is "unlikely" a Labour government would raise VAT, but didn't rule out a VAT rise.

Commenting, Shadow Exchequer Secretary to the Treasury, Shabana Mahmood said: "Before the last election David Cameron and George Osborne said they had no plans to raise VAT, but that’s exactly what they did after they got in. Raising VAT on families and pensioners is what Tory governments always do. These figures show that over the last four years a family with children has paid £1800 more in higher VAT under the Tories."

Continuing Ms Mahmood said: "The truth is that the only people who have got a big tax cut under this Government are those earning over £150,000. And while everyone else faces a cost-of-living crisis, the Tories have refused to rule out another VAT rise in the next Parliament to pay for their £7 billion of unfunded tax promises. Labour’s economic plan will back working families and balance the books in a fairer way. We’ll cut taxes for 24 million people through a lower 10p starting rate of tax, freeze energy bills, cut business rates and expand free childcare for working parents."

“And we’ll get the deficit down in a fairer way by reversing David Cameron’s £3 billion a year tax cut for the top one per cent of earners.” Shabana Mahmood added.

Responding, to Labour's claims, a Conservative spokesman said that they had been forced to take "difficult decisions" to deal with the deficit in the public finances left by the last Labour government. "Labour appear to be saying they would borrow £12 billion more to reverse this decision - meaning more debt for our children to repay," the spokesman added.