Cameron: Labour 'has secret jobs tax plan'

Skirmishes over Tories’ promise not to raise VAT in last PMQs before May

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David Cameron unexpectedly ruled out raising VAT and the Labour leadership promised not to increase National Insurance rates as tax dominated the final parliamentary skirmishes before the general election.

Tory and Labour chiefs moved to deny their opponents potentially lethal ammunition in a campaign in which each will accuse the other of planning a “tax bombshell” after the election.

But the tit-for-tat declarations will leave both parties facing fresh questions over the credibility of their promises to balance the nation’s books.

Ed Miliband had opened his attack at Prime Minister’s Questions yesterday with a challenge to Mr Cameron to give a “straight answer” over whether he would raise VAT if he won the election.

Mr Cameron surprised him by simply replying: “Straight questions deserve straight answers, and the answer is yes.”

 

The Chancellor, George Osborne, had sidestepped the same question five times less than 24 hours earlier when he appeared before the Commons treasury select committee.

His prevarication coincided with the launch of a Labour poster campaign claiming a Cameron government planned to increase VAT to pay spending cuts.

In raucous scenes, the Prime Minister then sought to turn the tables on the Labour leader by asking him to provide a similarly categorical assurance that his party would leave NI rates untouched after the election. Mr Miliband refused to do so, leading the Prime Minister to accuse the opposition of plotting a secret “jobs tax” to raise cash for its spending plans.

“This is their tax of choice, this is what they clobber working people, families, enterprises with,” Mr Cameron told MPs.

Labour sources were later only able to say the party had “no need” to increase NI because its policies were fully funded.

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Labour leader Ed Miliband speaks during Prime Minister's Questions on Wednesday

However, less than an hour had elapsed before the shadow Chancellor Ed Balls produced the form of words that the party leader had avoided in the Commons clashes.

Mr Balls said: “We will make it clear in the manifesto Labour will not be raising National Insurance. That will be a clear pledge from us.”

He also stressed that Labour would not increase the basic or higher rate of income tax or the main rate of VAT.

Mr Balls claimed the Conservative announcement had been made in panic and would not be believed by the voters.

Later Labour insisted it would press on with its campaign, accusing Mr Cameron – and earlier Tory leaders – of breaking promises not to increase VAT.

Conservative sources confirmed the Prime Minister had ruled out raising VAT from its current rate of 20 per cent for the entire five-year lifetime of a parliament.

The party’s chairman, Grant Shapps, claimed Labour was “in chaos over tax”, citing the different answers on NI produced by Mr Miliband and Mr Balls. He said Labour would have to find £15bn in tax rises to meet its promises to reduce the deficit.

“It’s becoming clearer by the day that Ed Miliband has a secret plan for a new jobs tax and other higher taxes on hard-working people.

“Labour did it before and they’ll do it again,” Mr Shapps said.

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