Treasury's secret 18.5% VAT bomb

26 November 2008 / by Rebecca Sargent
Plans to push Value Added Tax (VAT) up to 18.5 per cent after its temporary drop were dismissed by the Treasury at the last minute it has arisen after they were accidentally leaked yesterday.

According to reports, up until less than a week ago, the plan was to increase VAT to 18.5 per cent in 2011-12 after its initial drop to 15 per cent which begins on Monday.

And, according to the BBC, a Treasury spokesperson did not deny the plans, telling the broadcasting house that a VAT increase "was an option that was considered and rejected."

The revelation, which has been put down to a mistake as the notes were accidently published on the internet, has been particularly bad for Darling, as Shadow Chancellor George Osborne has seized the opportunity to slam Darling's integrity, saying:

"This is Labour's secret tax bombshell. It explains why there is a black hole (of £10bn in 2011-12) in the PBR – because at the last minute Gordon Brown clearly decided to keep secret his plan to hit everyone with an extra tax to pay for his borrowing binge.

"Labour have a secret tax bombshell set to explode under the British people if they ever get re-elected. It tells you all you need to know about Gordon Brown and Labour," he added.

It is thought that the planned increase in VAT was ditched at the last minute, in favour of a 0.5 per cent increase in National Insurance, and a 45 per cent income tax on salaries above £150,000.

The Liberal Democrat Shadow Chancellor Vince Cable, also took the chance to doubt Darling and the Labour Government's ability to see the UK through a recession.

He said: "At a time of economic emergency we need a clear-headed Government with a sound economic strategy, instead we are seeing tax policy being made up on the hoof.

"The fact that the Government can't even get its briefing documents right doesn't bode well for their future management of the economy."

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