Tories will not rule out 20 per cent VAT
THE CONSERVATIVE party denied reports it was considering raising the rate of VAT to 20 per cent yesterday, although it refused to rule the move out for future Treasury budgets.
A spokesman for the party, likely to take over the government at a general election next year, said the idea of boosting the tax rate as a fundraising measure to ease the Treasury’s spiralling debts has never even been discussed.
But he said the Tories could not rule the move out as the party is giving no guidance over the contents of its first budget, which would not be launched until well into next year.
Press reports over the weekend claimed the plans were being “very actively” considered as part of an “emergency” budget to bring the Treasury’s debts – which have ballooned amid unprecedented fiscal stimulus measures and bank bailouts – under control.
Andrew Lansley, the Tory shadow health secretary, yesterday insisted the party wants to avoid big tax hikes, which it believes stifle economic growth: “As far as I am aware we have absolutely no such plan and I know there have been no such senior level discussions,” he told the BBC.
Tory leader David Cameron has said he refuses to rule out tax rises to tackle the Treasury’s debt problems.
Chancellor Alistair Darling cut the rate of VAT – which forms part of the retail prices of goods and services – from its usual 17.5 per cent to 15 per cent in his last budget in a temporary measure that ends in January. Such cuts have the effect of lowering prices and so are made in a bid to boost consumer spending levels to aid businesses sales. Retailers, which have suffered particularly as consumers have cut spending, have called for the VAT cut to be extended.