VAT rose to 20 per cent today as part of the Coalition Government’s plan to reduce the record deficit left by the last Government. The proposals were set out by the Chancellor George Osborne in June last year.
The Labour Party opposed the changes, despite the fact that they planned to raise VAT whilst in Government and did not rule out raising it if they had won the general election last May.
Shadow Chancellor Alan Johnson admitted to the BBC today that Labour would prefer to raise National Insurance Contributions, which business leaders agree would be a harmful tax on jobs and the recovery.
George Osborne said:
"Labour left Britain with record debts that people know we have to deal with to avoid an economic crisis.
“VAT is a powerful weapon to tackle debt and if we don't use it then the spending cuts would be over thirteen billion pounds bigger.
“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.
“The question Ed Miliband faces is this: if you're not raising VAT, where are the extra 13bn pounds of spending cuts coming from? The NHS? Schools?
“2011 is the year Labour's last Budget claimed they would start cutting the deficit. It's time Labour's leader gave us answers, not bandwagons and a blank sheet of paper."