Labour to pledge not to increase VAT

Labour's general election manifesto will contain a pledge not to raise VAT, shadow chancellor Ed Balls has said.

The party will make a "clear pledge" not to increase the tax, which it says "hits pensioners and the poorest hardest", if it wins the election.

Labour has repeatedly claimed the Conservatives would have to increase VAT due to the scale of spending cuts planned for after the general election.

The Tories said Labour planned "hikes" in income tax or national insurance.

The Liberal Democrats say their deficit reduction plans would not require an increase in VAT, with planned tax rises focused on the wealthy.

'History repeating'

VAT, which is levied on most business transactions and many goods and services, was increased from 17.5% to 20% in Chancellor George Osborne's first Budget in 2010.

Speaking in Birmingham, in front of a new Labour election poster featuring the letters VAT as concrete blocks with the slogan: "Don't let the Tories hit you with this," said the increase had cost families an average of £1,800 over four years.

He said VAT had been raised by every Conservative administration for 40 years and history was now "repeating itself".

"It's now clear the only way the Tories can make their sums add up on their extreme plans is to raise VAT again after the election," said Mr Balls.

"The extreme cuts to public services like police, defence and social care under these plans would be so deep they'd be almost impossible to achieve, even for this chancellor.

"The Tories have also made £10bn of unfunded tax promises - which they have still not told us how they will pay for.

"That's why people will conclude that to make their sums add up the Tories will end up putting our NHS at risk and raising VAT again."

'Raise taxes'

He added: "So, today, I can announce a clear pledge to the British people. The next Labour government will not raise VAT. And we will not extend it to food, children's clothes, books, newspapers and public transport fares.

"We will not raise VAT because it's the tax that hits everyone. It's the tax that hits you every day. And it hits pensioners and the poorest hardest."

He said he could make such a commitment because Labour's plans were "fully funded and paid for" thanks to previously announced measures such as the mansion tax and restoring the 50% top rate of income tax.

A Conservative spokesman said Labour had "let the cat out of the bag" about its plans to increase taxes.

He added: "Ed Miliband and Ed Balls have repeatedly said they will raise taxes.

"It is time that they came clean with the British public about which taxes they will raise - income tax or national insurance."

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