Burden of VAT 'greater than ever'

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The Independent Online
TODAY'S imposition of VAT on domestic fuel will make the tax even more hated than the community charge, Labour predicted yesterday as it released Treasury figures showing how the tax was now a greater burden than ever on on British families.

Gordon Brown, the shadow Chancellor, said the Prime Minister's potential successors - Kenneth Clarke and Michael Heseltine - were equally culpable in lying about tax.

Labour stepped up its campaign against avoiding the tax by pre-payment of fuel bills with a letter to the chairman of British Gas urging that the windfall profits made as a result be returned to customers.

With only those with money able to benefit, it was a case of the 'unfairest tax being introduced in the unfairest way,' Mr Brown said.

Harriet Harman, shadow Secretary to the Treasury, said a typical family would pay 5.8 per cent of their income, pounds 1,140, on VAT from today and 6.3 per cent or pounds 1,269 from next April when the fuel tax rises from 8 to 17.5 per cent. That compared with 2.7 per cent of income in 1978/79, an increase of more than pounds 600 at today's prices. Mr Brown said Mr Clarke, the Chancellor, was 'addicted' to VAT and had backed its wide imposition on other items, including children's clothes.

'To put VAT in perspective, the total revenue collected by the poll tax in 1992/93 was pounds 8.2bn,' Mr Brown said. VAT was set to cost nearly six times that amount, making it the most unpopular tax ever, he claimed.

Mr Brown said the VAT rise, in addition to National Insurance and income tax changes, exploded the 'Kenneth Clarke myth' that the tax increases were the equivalent of only three pints of beer a week - 'for many pensioners, the loss is not three pints of beer but decent heating'.

Mr Clarke insisted that pre-payment of bills was not unfair. He told a Westminster news conference: 'Every time anybody realises a tax increase might come they rush out to buy beer . . . cigarettes, whatever it may be.

'There are always going to be some people with money in their pocket who think they want to spend it on next year's gas bill,' he said.