George Osborne hints he would lower income tax before cutting VAT

Labour is seeking to capitalise on what it sees as a weakness in Tory tax policy.

Alan Johnson, the shadow chancellor, said Labour?s pre-election stance of keeping VAT at 17.5 per cent and instead raising NI was still in place. He said Labour had outlined �19 billion of tax rises in its last Budget, one element being NI increases.

Mr Johnson "That was the argument at the General Election, that's still our argument now."

He attacked the VAT rise as "a broken promise.?

He added: ?It does nothing for jobs and growth - this year has to be all about continuing the growth momentum. It hits the poorest hardest. For those three reasons this is the wrong tax at the wrong time."

Labour also demanded that Mr Osborne apologise for claiming that VAT was a ?progressive? tax.

The party pointed to quotes from both David Cameron and Nick Clegg which disputed this. Mr Cameron had claimed in 2009 that it was ?very regressive? and that it hits the poorest hardest.

Mr Miliband said: ?George Osborne should stop treating people like fools. He claims that VAT is fair but David Cameron has admitted it is unfair. He should come out and apologise for misleading the British people.?

And Alistair Darling, the last Labour chancellor, denied Mr Osborne?s claim that he had been planning to raise VAT if Labour won the election.

He added: ?We decided to raise NI, not VAT and unlike the Tories I didn?t go through the election campaign promising one thing and intending to do quite another. Their VAT rise offers no protection for vulnerable groups like pensioners.?

But Mr Osborne repeated his claims during the election that Labour?s rise in NI was ?a tax on jobs.?

He said Labour had now made it clear where it?s priorities for tax rises lay.

Mr Osborne added: ?Let me make it absolutely clear: our plans for the deficit reduction are set out now. All the components are in place, so we have set out the entire plans. There's not a missing component."

He added that the VAT move "will increase employment" because it would increase confidence that the Government was tackling the country's deficit.

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Source: http://www.telegraph.co.uk/news/newstopics/politics/8238830/George-Osborne-hints-he-would-lower-income-tax-before-cutting-VAT.html

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