VAT rise passes first hurdle

29.06.2010   Local MP, Andrew George, gave a ‘fair wind’ to the Government’s Budget proposals in the Commons last night but will continue to press the Government to justify its proposed VAT increase.

The Chancellor, in introducing the Budget last week, said that “the richest would pay the most and the vulnerable would be protected”. However, Mr George has queried whether the VAT increase would protect vulnerable families, rural travellers, charities and small businesses.

Mr George had introduced an amendment which called upon the Government to publish impact assessments on its VAT increase.

Each of the Budget measures were voted through in the Commons last night. These measures will now be incorporated in a Finance Bill which will be debated at its Second Reading next week and then face line by line scrutiny in the Committee Stages during the months ahead.

Mr George said that, without further information about the potential impact of the VAT rise, it would not be possible to make a clear or honest assessment of this measure.

But, if significant impacts were found, then he hopes that the Government would consider alternative measures of raising the finance.

Mr George said: “The VAT increase will not be implemented until next year. Before then, the Government must do more to justify that this is the best way of raising the necessary finance. An additional £13 billion will be raised by this measure.

“Those who got the country into this mess should do the most to help us get out of it. The Liberal Democrat inspired Bankers’ Levy has been set at a modest level and will raise just £2.5 billion per annum.

“This is a gnat bite for the bankers. An alternative to the VAT hike would be a higher levy on the bankers and further efforts to close tax loopholes exploited by the wealthy.”

Further opportunities to amend the Government’s Budget proposals will arise as the Finance Bill proceeds through the House in the coming months.