The Labour party will lay down a significant general election marker today, with a pledge that VAT will not rise if it is elected to power on 7 May.
Shadow chancellor Ed Balls will announce the new manifesto commitment during a speech in Birmingham. Balls will say:
Today I can announce a clear pledge to the British people. The next Labour government will not raise VAT.
The Conservative and Liberal Democrat coalition raised the main rate of VAT from 17.5 per cent to 20 per cent in the 2010 emergency Budget.
The Conservatives say that while Labour has committed to £30bn of deficit reduction, and also committed to tax hikes, Balls's party has only admitted to one tax that will be raised so far.
A Tory spokesman commented:
Labour has already announced a raft of tax rises, but all but one of these would fund their spending pledges. Ed Miliband and Balls have repeatedly said they will raise taxes. It is time that they came clean with the British public about which taxes they will raise – income tax or national insurance?
Balls will reject the charge today, insisting that Labour’s tax and spending plans will be fully funded. He will say:
Labour can make this manifesto commitment for the next Parliament because, unlike the Tories, all of our promises are fully funded and paid for.
Labour has said it would raise the top rate of tax back to 50p, lift the bank levy, and close tax loopholes
Meanwhile a Liberal Democrat spokesperson said on Monday night:
Danny Alexander announced weeks ago that because the Liberal Democrats have managed the economy through the last five years there’s no need to increase the rate of VAT, income tax, national insurance or corporation tax for most businesses.