The Conservatives, planning a 20% VAT rate (or more)

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The BBC note:

The Tories have "absolutely no plans" to increase VAT to 20% if they win the next general election, shadow health secretary Andrew Lansley has insisted.

On the BBC's Andrew Marr Show, Mr Lansley rejected reports that the move was being "very actively considered".

He said "no such plan" existed and denied reports that "senior level discussions" were held to discuss it.

Except that The Sunday Telegraph (known as The Torygraph for good reason, for those not familiar with the UK press) has suggested that that VAT rise would be introduced by a Conservative government within "weeks" of a Tory election victory. As the BBC again note:

According to the newspaper, the decision to make the increase increase as part of an "emergency" budget to reduce the UK's debt had been taken by Mr Cameron and Shadow Chancellor George Osborne.

I’ll be frank: I don’t believe the Tories on this for a moment.

We know the Tories love indirect tax. Their friends in the Institute for Fiscal Studies and at Oxford University (much the same thing these days, it has to be said)  are saying we should massively increase VAT in the UK — as I noted in detail last year — suggesting a rate way above 20%. And KPMG and PWC have both actively promoted VAT increases in the UK as the rest of the world as the answer to all tax problems.

But note what I showed just a week or so ago — that VAT is intently regressive — meaning that the burden of the tax falls much more heavily on low earnings households than it does on those with higher income. In the circumstances Stephen Timms, #2 at the Treasury somewhat missed the target when he told the BBC:

If David Cameron is seriously considering this, he needs to explain why he thinks it's right that ordinary families should pay more tax while he's pledging £200,000 tax cuts for the 3,000 richest estates.

True, but comparing VAT with inheritance tax is misleading. The issue here is a simple one: the Tories are planning to increase taxes on middle and low income families to know doubt subsidies the wealthiest families. That’s because of the nonsense we hear time and again about their desire to keep down tax rates to support entrepreneurs. Those ‘entrepreneurs’ are of course the bankers and their friends who have brought this country to its knees. And the Tories want to exacerbate the trend.

Shout it loud and clear: Cameron and Osborne are out to shaft you.


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