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Brown refuses to rule out higher VAT rate as Cameron launches attack
Joe Murphy, Political Editor26.11.08
GORDON Brown today admitted that the Government considered raising the VAT rate to 20 per cent or higher before rejecting the plan.
The admission came in Prime Minister's Questions under a grilling from David Cameron.
After being challenged to deny the plan had been on the table before this week's pre-Budget report, Mr Brown said: "I've said we considered all options but we rejected options."
Mr Cameron fired back: "So there we have it from you. This plan was considered - even higher VAT."
Mr Brown responded: "We rejected it because as the Chancellor said on Monday we chose the options that were fairest to ordinary and hard-working families."
The Tory leader then repeatedly challenged Mr Brown to rule out a future increase in VAT beyond the current plans. The exchange came after a Treasury document accidentally posted on a government website disclosed a rise to 18.5 per cent in 2011 had been almost agreed days before the PBR was unveiled.
Mr Cameron taunted the Prime Minister by saying the document proved that a VAT rise was not some "madcap idea" that had been quickly discarded. "I've got the document right here," he said. "You can get it on the internet. It's absolutely clear you are planning a VAT bombshell to hit every family in the country." He said a senior Treasury minister had even signed the document dated on Monday.
That was later denied by Alistair Darling who said minister Stephen Timms's name had been written in by an official without his knowledge. In a stormy session of Prime Minister's Questions, Mr Cameron derided the 2.5 per cent point cut in VAT to 15 per cent, saying it would leave shoppers unmoved.
"You are proposing to borrow a huge amount of money to cut prices marginally, when they are already falling, and to hit every family with a tax bombshell in two years time," he said.
"What is so stimulating about that? Idon't know where you go shopping but the shops are discounting by 20 per cent and 30 per cent already." But the Prime Minister hit back to roars of Labour approval: "You are the do-nothing leader of a do-nothing party."
A series of disputes were swirling around the complex pre-Budget report package, which injects £20billion into the economy over the next two years, but then imposes tax rises and spending cuts to slow down a massive increase in state debt to a trillion pounds.
Another row was over the accuracy of the Treasury claim that higher taxes will only hit those earning more than £40,000. The Tories say that people on £20,000 to £40,000, including teachers and police officers, would pay more.
Meanwhile, Mr Darling launched his own fightback against the VAT claims. Opening an emergency Commons debate this afternoon, he accused shadow chancellor George Osborne of painting a false picture by leaving out tax changes that help the middle classes from his calculations.
Mr Darling's claims are backed by impartial Treasury officials but the row hinges on whether a £120 tax relief announced in May as compensation for the 10p tax band is counted or not.
The Institute for Fiscal Studies said that people earning £20,000 to £40,000 would pay more than they do today, when the £120 is taken into account. But the IFS also agreed with Mr Darling that the same group would pay less than they would have done by 2011 if the PBR changes had not been announced.
Reader views (33)
Well this is only going to end badly, we have borrowed more money than at anytime since world war 2 the drop in vat will help no one. I know why the government has bailed out the banks i just wonder how long it is before the banks are fully state owned that way the goverment would set everything rates,property values etc...
adopting an almost soviet approach to our finance problems there is alot for the new conservtive goverment to sort out lets face it labour are done there is noway they win the next election
- Rob, Norwich,England
Jacqueline. Hampstead
Can you repeat that please?
- James Hennessy, london england
John carey,Philadelphia
And what a wonderful job the right wing loonies led by the moronic Bush have done for the good old USA. I'm surprise you hadn't figured that one out before offering us your half baked words of wisdom.
- James Hennessy, london england
The reduction in VAT to 15% is a utter sham and furthermore its an indication that this Government as no real concept on how to manage the present state of affairs.Borrowing Billions of pounds to make people a £100/£200 better off a year is ridiculous,since the fact is that such a small amount is not going to make any difference to anyones lives, rich or poor.In a time when this Government needs to show stronge leadership, they're more interested in peddling for Votes by offering tainted gifts which they intend on clawing back two folds from the middle england tax payers.If the government is so intent on on borrowing Billions upon Billions of pound then they should be using that money to create more jobs,to support once sound businesses,to rebuild the infra structure of this nation , instead they want to the spends Billions on handing out 85pence a day to encourage people to spend more...Right!!!!
- Michael Shaw, britain
If the government was earnest in its wish to get people spending more, it should have been done with income tax cuts.
Do we not all get the 'feel good factor' when we have more pay in our packets? The VAT cut is a waste of time.
- Dudley, Dorking
How can the opposition do anything? After 12yrs in government Nu-Labour are still falling back on the fatuous "under the last Tory government" justification....the opoosition's job is to come up with ideas and force the government to justofy their policies. Something these idiots refuse or unable to do.
- Mark, London
New Labour is dead. Long live new labour.
- Marke, Houston, Texas
How many angels can fit on the head of a pin? The Government's PBR is all spin and lies. There have to be much bigger tax increases on the way than those announced by Darling on Monday, otherwise the big black hole in the Government finances will never be filled!
- Richard, Kidderminster, England
when the dept. stores are begging for customers the gov't plans higher sales tax.the lefy loonies would love him over here,go figure
- John Carey, philadelphia,usa
Get that Darling Brownny out ASAP.
- David Oozageer, South croydon, surrey
But Lister Derling said yesterday thatt they didn't ?! Can they not tell any truth, ever???
- Jacqueline, Hampstead, London
Denis Regan, Cardiff ,wales
So you are going back to Thatcher years as if Brown and Blair was not in power during the last 11 years. Why did Brown not reduce VAT say 3 years ago? What use of it now when the tsunami has hit. Do you think what Brown did will put jobs back, even if it did there will be enough immigrants in Brown's work permit bonanza who will take them. If Brown was really serious, he should have put money to improve infrastructures which will create jobs and help manufacturing industries which Brown did not help. Just imposing 45% income for those earninh £150,000 or over is a cynical demonstration as these will use accountants to find loopholes not to pay the increase of 5%.
If you want to know whther Brown's billions work, just look at the NHs where he threw billions. My local hospital has cut its services, thee is a queue to get into consultants list, my GP earns more for less. Sometimes not doing anything foolish is the best way, and it is not Brown's way.
- Norman, LONDON
A total repeat of the financial chaos left when the last Labour Party government left power in 1979. Labour is and always has been fiscally irresponsible, and that's once again shining through. Mrs Thatcher had to call on the IMF to save the UK's bacon after the last Labour government. But will IMF help be there when Cameron assumes power in the next year or so? With dopes like Brown, Darling and Cooper at the helm, this ship isn't going to stay afloat much longer.
- Phil Jones, London UK
VAT is a regressive tax (whereby the lowest paid pay a higher proportion of their income on the same basket of VATed goods as the highest earners. A progressive tax, eg income tax is the only way to help those on low and middle earners and let the higher earners (who have had, and continue to have, so many tax breaks/dodges) take the strain this time, particularly as these same high earners have seen their incomes rise at a faster rate than lower/middle income earners over the last 20 years (the Gini co-efficient showing the distribution of wealth and the gap between rich and poor has risen continually since the start of Thatcher's premiership and New Labour have continued this dreadful trend). It is now time for these people to give something back. Ernst & Young need not fear - these high earners are going nowhere - there are no jobs for them to go to (global recession and all - all the economies are likely to put in tax claw backs in the next few years)
- Andy, London
James - so borrowing more money on top of already borrowed money is a good idea? So hiding tax rises from all of UK is good idea? Whilst the Conservatives have not come up with anything better at least they are questioning the sheer lunacy of what is going on around us instead of blindly going along with it like a pack of sheep.
Lets face facts no one has the first idea what to do to get us out of the BROWN stuff (that Brown got us into) but the one bet I would put on this whole sad sorry mess is that Brown and Labour will all see us homeless and bankrupt as they put UK PLC on the roulette table for one last gamble before they are thrown out of the casino.
- Fly, London
The Tories may well be the 'Do Nothing' party, but Labour is the 'Do anything to stay in power' Party, the 'Duplicitious' Party.
- Sam Fisher, Brize Norton, Oxon.
Labour supporters should stop propagating the disinformation of their masters. The Conservatives have made proposals for easements in NI contributions and other measures to help businesses. They also have suggested a more coherent and effective recapitalistation of banks. People may not agree with these proposals but it is dishonest to say they do not exist. Of course, I can see why Labour are whining about lack of Conservative proposals: they pinch them. One of the less mentioned aspects of Darling's statement was the creation of a body to monitor levels of debt in the economy suggested a few weeks ago by David Cameron. Pity the wheels are coming off Darling's proposals already, but then with Labour they always do.
- James Elliott, Eastbourne UK
If you have opted for the VAT flat rate scheme you will probably find that, like my business, the reduction in the overall VAT rate is not reflected fully in the new flat rate applicable and you will end up actually paying more VAT.
Usual Labour con!
- Mike Kimmins, Bexley, Kent
Its the easiest thing in the world to conplain about how hard things are at present, but as the tories are proving it is much harder to come up with a few solutions to get us throught our problems. So far they have come up with zilch, zero, absolutely nothing. Apart from playing the blame game and amusing his fellow toffs Osborne didn't come up with a single policy during the budget debate in the house of commons, and that is the reason they have seen a 20% lead in the polls dissapear within a few weeks. Do they take the electorate for fools. Just wringing your hands and hoping for the best simply isn't good enough.
- James Hennessy, london england
All the ranting from the desperate Tory supporters cannot disguise the fact that young Gideon has been found wanting.
- Colin, barking essex
Jim in Fife you are so right
- Phil, London
If the Government does not want us to be "misled" on possible VAT rises to 18 1/2%, why was it put on any document outside the Treasury!? It surely was not leaked Mr Brown accuses David Cameron of being a leader with no solutions. Surely it is not up to the Conservative party to sort the mess largely created by Mr Brown! I also believe that Mr Cameron has ordered his Shadow Cabinet to go through their departments and seek economies and then will state what possible remedy he will have.It is the job of the Opposition to oppose! What would Labour do in the same situation?
- Diana From Devon, Newton Abbt, UK
Had to laugh yesterday. You know how Labour are trying to blame everything on the USA. Well Henry Paulson said at a press conference. "The root cause of the problem is over leveraged house buyers"
Brown and Darling please note.
- Harry H, London UK
Oh yee of little faith.It was Mrs Thatcher that douled VAT not reduced it.Remember that!Always the Tories increased VAT now Labour reduces it and the same old cronies come out with a howl.
The Opposition is a Do nothing Opposition with a windbag Do nothing Leader.God help us if they ever came to power.
- Denis Regan, Cardiff ,wales
Surely it would be incompetent of the treasury NOT to have considered all options available to reduce Government borrowings once the recession has passed. Osborne is, as usual, looking for things to criticise even if he has to make them up.
The PBR on the face of it doesn't seem the most sensible way to stimulate the economy - lower-paid people spend proportionally more of their income on zero-rated and exempt items than the wealthier. Perhaps Osborne should talk about that instead.
- Mike, Worcester, England
I do not believe one single word uttered by either Brown and Darling. As far as I am concerned they have trashed the economy with their lies,spin,and obfuscation. Please call an election soon.
- Michael, London
Everybody's fighting his corner - even angry Alistair! And Ernst & Young, who warn that the rich will leave - the rich being their clients, of course. Very doubtful if the rich will leave - they like London's entertainment, they like the schools for their kids, they like being safe from people who don't like them, they like paying less tax than their cleaning lady. Why leave?
- John Problem, Hackney Wick, London, UK
The Tories must stop deliberately misleading the public - that is the government's job.
- Nobby Clark, Perth, Scotland
We remember the 10p tax fiasco. We remember the troops coming home for Christmas, except they had never gone. All Brown's 'gifts' come with small print and a planned clawback later on a massive scale beyond the next election. It's simply not possible to pay back the biggest national debt in history with a slight 5% tax on the 0.25% of people earning £150K+ per annum whose accountants won't wriggle out of it. We will all have to pay for Mr Brown and Mr Darling and pay BIG.
- Tom Moncrieff, london W6
I agree with Jim, Brown should apologise to everyone who took out loans in last few years.............
to presume that we can make adult decisions on our own is just ridiculous.....clearly our education system is incapable of producing people who can make their own assessments. It's all Brown's fault - plus we had a terrible weather this summer - again Nu Labour has not apologised for this....
- Martin_Clerkenwell, london
No question. If you are over 50 you will be paying for Brown's profligacy into the grave.
The rest of the world will have long recovered but you cannot have 11 years of massive overspend, both overt and covert, without a payback. The private sector can't any more that the public sector. Add in the huge expansion of non-productive public sector recruitment, that contiues today, and pensions and the receipe for massive civil unrest grows ever stronger. An economic middle class revolution? Sounds just like Argentina and the like.
- Antoine Desmoines, London, UK
Darling - we don't believe anything, or trust anything, you say anymore. Clearly the best way around this is to get Labour out at the next election and let the Conservative Party lead us forward.
- Anon, London
Brown Labour brought in Lord Mandy of Sleaze and Spin to manipulate public opinion. Labour removed independent civil servants who minuted delicate meetings so they could plan deceptions. They use personal smears on any opposition, while dragging the UK into debt.
Insiders say the only parts of government now modern and fit for purpose across most government deparments are the Press Offices staffed by labour spinners who organise regular 'bad news days' when such news is sidelined by other events.
The current give now and take back twice as much after the general election in 2010 is classic Brown Labour, deception with spins to deceive the voters.
Burglar Brown and Dr Death have signed the UK into more debt than the IMF could cover. They care only for the votes, they do not care for the UK.
Brown must apologise to every person who he conned with his 'No More Bust' claim so they took huge loans. These will destroy their lives. Burglar Brown is more guilty than any banker.
- Jim, fife
