Cameron tax law could cause ‘monumental damage’ says bank

David Cameron's pledge to enshrine in law a promise not to raise income tax, VAT or National Insurance is unraveling already

 

Prime minister David Cameron’s pledge to enshrine in law a promise not to raise income tax, VAT or National Insurance in the next parliament risks doing “munumental damage” to the British economy in the event of an economic downturn, according to a major bank.

This morning David Cameron set out a ‘five-year lock’, promising to introduce a law to prevent further tax increases before 2020 if the Conservatives win power.

But according to Steve Barrow, head of G-10 strategy at Standard Bank, the plan “could cause monumental damage if it has to be defied in the event of a deterioration of the economy”.

Speaking to Bloomberg Business, Mr Barrow also said it showed the Conservatives were “the more desperate party” ahead of next week’s election.

Standard Bank London is the international merchant banking arm of South Africa’s Standard Bank Group, the largest African bank by assets.

Prior to the 2010 election, David Cameron said he had “absolutely no plans” to raise VAT. But soon after coming to power his government announceed a rise in VAT from 17.5 per cent to 20 per cent.

James Bloodworth is the editor of Left Foot Forward. Follow him on Twitter

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