The UK general election is less than a month away and our politicians are busy jumping on the VAT bandwagon. So what can you expect from the major parties in May 2015?
Labour and tories pledge not to raise VAT
On 15th Marchy David Cameron ruled out an increase in VAT if his party hangs onto power. Apparently it was a “clear promise”, and it came with a challenge to Labour: not to raise National Insurance rates.
Mr Miliband countered, saying that since Cameron had raised VAT in a move that directly contradicted his pre-election promises last time, nobody would believe his promises this time around. But he announced later that Labour would not be raising National Insurance rates if they won power in May.
Labour’s main line of attack, as revealed by their poster campaign, is that the tories are secretly planning to raise VAT rates because, unless they do, there’s no way they’ll achieve their spending cuts without it. And there’s even more scepticism in the wind since the Chancellor George Osborne has been pretty reluctant to make such a promise so far, despite the need to fill the £90bn hole in the public finances.
Both parties are under serious pressure to spell out their financial plans in much more detail, so it’ll be interesting to see what they come up with.
What about Lib Dem VAT plans?
As Liberal Democrat Chief Secretary to the Treasury Danny Alexander says, “Labour have no credibility on the economy. Ed Balls might be ruling out a rise in VAT but he can’t rule out a rise in National Insurance and already plans to hike Corporation Tax. Because the Liberal Democrats have taken the difficult decisions to stick to a balanced recovery, under our future plans there is no need to raise income tax, national insurance, VAT or corporation tax.”
Green Party views on VAT
The Green Party plans to cut VAT on house repairs and renovations, which is currently 20%. They quote independent research from Experian, revealing how a VAT cut on home renovations will drive 42,000 extra full-time equivalent construction jobs between now and 2020, plus 53,000 more jobs in the wider economy.
UKIP and VAT
Nigel Farage’s party promises to remove VAT on tampons, currently treated as a non-essential luxury by the Treasury. Under current EU rules nothing that has ever had VAT charged on it can have the tax completely removed. And they believe it is “very wrong” to give our tax sovereignty to a “bunch of faceless – and mostly male – EU Commissioners who simply don’t understand real life, let alone real life for women.” What about UKIP’s plans for VAT in general? It’s difficult to tell what they’re planning since VAT isn’t specifically mentioned on their website… yet.
Whoever ends up in power during May, every good business deserves competent, expert VAT support. If that’s you, let’s talk.