The 2.5% hike in VAT which comes into effect at midnight tonight will cost families almost £400 a year and put up to 250,000 jobs at risk, Labour leader Ed Miliband warned today.
He accused both of the parties in the ruling coalition of breaking election promises on tax, reminding voters that Liberal Democrat leader Nick Clegg campaigned against a “Tory VAT bombshell”, while Conservatives promoted a “fuel duty stabiliser” to reduce levies on petrol when prices are high at the pump.
The increase to 20% will force up the cost not only of a tank of petrol, but also of regular purchases like a mobile phone call, cup of coffee or DVD, he said.
But he was accused of “opportunism” by Chancellor George Osborne, who challenged him to explain what he would cut to make up for the revenue he would lose by scrapping the planned VAT increase.
“VAT is a powerful weapon to tackle debt and if we don’t use it then the spending cuts would be over £13 billion pounds bigger,” said the Chancellor.
“When Labour was in government they accepted this, which is why Alistair Darling says he wanted to put up VAT. Now Labour is in opposition, Ed Miliband has shown weak leadership by jumping on the bandwagon of opportunism.