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12/07/2010:Reading MP’s should oppose the VAT increase, which will hit pensioners hardest, says Labour:
Reading Labour chair, Sarah King, has called on Reading’s Conservative MPs to vote against the Coalition Government’s planned increase in VAT to 20%, which will cost Reading households an extra £500 per year on average.
Furthermore, Labour has asked that Liberal Democrat Councillors, who are part of the coalition with the Conservatives running Reading Borough Council, to help lobby the local MPs given that they themselves campaigned against increasing VAT in the General Election and even accused the Conservatives of having a secret VAT tax bombshell. The Conservatives denied it (see notes below) but a VAT increase was part of George Osborne’s first budget.
Sarah says: “Putting VAT up to 20% is an unfair tax rise which will hit pensioners in Reading the hardest. Pensioners have not been compensated with any increase in their tax free allowance or other benefits. In fact the least well-off pensioners, who are on Minimum Income Guarantee, are facing a cut in real terms from April as well as having to pay more because of the VAT rise in January.
“The Conservative-Liberal Democrat Government announced in its Budget on 22 June that VAT would be increased by 2.5%, even though during the election campaign the Conservatives said they had no plans to increase VAT and the Liberal Democrats campaigned against increasing VAT. Labour will be forcing a vote in the House of Commons to stop the increase in VAT from 17.5% to 20% later this week.
“We are calling on Rob Wilson and Alok Sharma, as the MP’s for Reading, to keep their election promises to the people who voted for them. We are saying don’t let them down, stand up for pensioners in Reading and join us in opposing this unfair VAT increase.”
The Coalition’s broken promises on VAT
George Osborne announced in the Budget that VAT will rise from 17.5% to 20% in January 2011.
Labour rejected a VAT increase as part of our deficit reduction plan, and chose to increase National Insurance Contributions instead, because VAT hits everyone, especially the poorest and pensioners.
Before the election, the Liberal Democrats warned that the Conservatives would raise VAT.
“Our plans do not require a rise in VAT. The Tory plans do. Their tax promises on marriage and jobs may sound appealing. But they come with a secret VAT bombshell close behind.”
Nick Clegg, Liberal Democrat press release, 8 April 2010
It turns out that they were right – but now they are in Government themselves, supporting that VAT increase.
During the election campaign, the Conservatives repeatedly denied that they had plans to raise VAT.
“We have no plans to increase VAT.”
George Osborne, The Times, 10 April 2010
VAT rises are unfair and regressive – and both David Cameron and Nick Clegg know it. David Cameron made an ‘absolutely promise’ that VAT is regressive and ‘hits the poorest the hardest’
“You could try as you say put it on VAT, sales tax, but again if you look at the effect of sales tax, it’s very regressive, it hits the poorest the hardest. It does, I absolutely promise you. Any sales tax, anything that goes on purchases that you make in shops tends to… if you look at it, where VAT goes now it doesn’t go on food obviously but it goes very very widely and VAT is a more regressive tax than income tax or council tax.”
David Cameron, Cameron Direct, Exeter, 8 May 2009
Nick Clegg shares this view that raising VAT would be regressive and penalise the poor:
“Well you clearly can’t write budgets in the future but what you can say is that the only way you can avoid a huge hike in. VAT, which let’s remember is a regressive tax, is by making sure that you take some of the decisions that we’ve done,”
Nick Clegg, Today Program, 7 April 2010
Liberal Democrat Deputy Leader Simon Hughes has confirmed they understand just how regressive a tax VAT is in penalising the poor.
“I hope we don’t have a VAT increase because it is the most regressive form of tax, it penalises the poor at the same rate as the rich“
Simon Hughes, BBC Daily Politics, 15 June 2010
But they are now all committed to supporting the increase in VAT when Labour forces a vote in the House of Commons.
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