As well as hitting the poorest through a freeze on working-age benefits, the Tories may also be planning to hit them again with a hike in VAT.
As well as hitting the poorest through a freeze on working-age benefits, the Tories may be planning to hit them again with a VAT hike
Just 24 hours after making a conference speech in which he promised tax cuts for ’30m people’, David Cameron has refused to rule out an increase in the rate of VAT to pay for it.
The promises made by Cameron yesterday, which included raising the threshold for those paying the 40 per cent rate of income tax and increasing the personal allowance, are set to cost over £7bn to fund.
Asked today about his party’s £7bn spending committment, Conservative Party chairman Grant Shapps refused to rule out increasing the rate of VAT in government:
Jo Coburn: Are you ruling out a rise in VAT?
Grant Shapps: Well I have absolutely no intention of writing future Budgets on your programme…
BBC Two: Daily Politics, 2 October, 2014
The government has already put up VAT once, from 17.5 per cent to 20 per cent in January 2011, and is now refusing to rule out doing so again. VAT is considered a regressive form of taxation as the proportion of an individual’s taken by the tax falls as they move up the income scale – as this (albeit dated) graph from Tax Research UK demonstrates:
And as the report states:
“On this basis an unambiguous conclusion can be drawn: VAT is regressive.”
So as well as hitting the poorest third of the population through a freeze on working-age benefits, the Tories may also be planning to hit them again through a hike in VAT.
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19 Responses to “Tories refuse to rule out VAT increase”
Peem Birrell
>>The government has already put up VAT once, from 17.5 per cent to 20 per cent in January 2011, and is now refusing to do so again.
Well that’s Ok then…
137point036
VAT is a tax on consumption (and therefore an encouragement savings). That makes it a good tax for anyone who believes in progress and growth. BUT BUT BUT it is only good overall if the taxes on wealth and income are fair. Fat chance with this government.
JoeDM
And will Labour increase Income Tax and National Insurance tax ?
Brian Bonto
Refusing TO RULE OUT doing so again.
Peter Martin
There’s no need for either party to raise taxation levels. Government creates money when it spends. When it taxes it destroys it. A surplus means it destroys more than it creates which is logically impossible except over a short time-scale.
All money created by government must eventually come back to be destroyed after it is trapped in the government’s very efficient tax net. Where else can it go? It can be temporarily reprieved from its eventual fate if it is saved, either by ‘prudent’ individuals or companies, or in the central banks of the big exporting countries.
The budget deficit is what it is because both savers in the UK, companies and individuals, and savers overseas , the big exporters, wish to hang on to ££ issued by the British government. Just quite why they do might be a mystery to many but that is what we see happen!
For example, if savers in the UK went out and converted their savings into bottles of whisky, and the money that Germany and China hold due to their trade imbalance was spent on Rolls Royce jet engines, or whatever, in Britain, then the government’s tax take would soar.
The deficit would simply disappear. If people want to save their money and be paid just about enough in interest to cover the effects of inflation, is that really such a problem? Why not just let them?
Any politician wanting to “balance the books” needs to stop us saving or buying imports. To do that they need to make us all very poor. If that’s their plan they should tell us before the election , not afterwards.