On the fourth anniversary of the Tory-led Government’s VAT rise, new figures show that families have paid on average £1,800 more in tax as a result.

In January 2011 David Cameron and George Osborne’s decision to increase VAT from 17.5 per cent to 20 per cent took effect.

The Treasury’s own figures show that a 2.5 per cent increase in VAT costs a couple with children £450 a year on average. Over four years, that means these families have paid a total of £1,800 more in VAT.

And having raised VAT in this Parliament, the Tories have failed to rule out another VAT hike in the next Parliament to pay for their £7 billion unfunded tax promises.

Commenting, Shabana Mahmood MP, Labour’s Shadow Exchequer Secretary to the Treasury, said:

“Before the last election David Cameron and George Osborne said they had no plans to raise VAT, but that’s exactly what they did after they got in.

“Raising VAT on families and pensioners is what Tory governments always do. These figures show that over the last four years a family with children has paid £1800 more in higher VAT under the Tories.

“The truth is that the only people who have got a big tax cut under this Government are those earning over £150,000. And while everyone else faces a cost-of-living crisis, the Tories have refused to rule out another VAT rise in the next Parliament to pay for their £7 billion of unfunded tax promises.

“Labour’s economic plan will back working families and balance the books in a fairer way. We’ll cut taxes for 24 million people through a lower 10p starting rate of tax, freeze energy bills, cut business rates and expand free childcare for working parents.

“And we’ll get the deficit down in a fairer way by reversing David Cameron’s £3 billion a year tax cut for the top one per cent of earners.”

ENDS

Notes to editors

1. The VAT rise from 17.5 per cent to 20 per cent took effect on 4 January 2011 (BBC, 4 January 2014, http://www.bbc.co.uk/news/business-12099638)
2. A PQ response from the Treasury has confirmed that the cost to a couple with children of a one percentage point rise in the standard rate of VAT is £180. This means that a 2.5 per cent increase would be £450 a year. The table below also sets out the impacts for other types of households.
3. In April 2010 David Cameron said he had “no plans to raise VAT”. "We have absolutely no plans to raise VAT.” David Cameron, Telegraph, 23 April 2010, http://www.telegraph.co.uk/news/election-2010/7625873/General-Election-2010-Cameron-dismisses-claim-Tories-would-put-up-VAT.html 
4. The Tories have used similar language in recent weeks when asked about another VAT rise – refusing to rule it out.

Andrew Marr:        I don’t want to be entirely Mr Grumpy, but looking ahead at the eye-watering scale of the deficit reduction still to be done, I must ask you some direct questions. First of all, are you going to raise VAT?

George Osborne:   Well we don’t have any plans to …

Andrew Marr Show, 30 November 2014