Treasury pushed to reveal VAT hike 'impact'

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Indy Politics

The Treasury faced Tory calls tonight to reveal what it believed the impact of raising VAT would be as the Opposition escalated the political row over a future "tax bombshell".

Chancellor Alistair Darling seriously considered the move as part of this week's Pre-Budget Report - but it was eventually dropped in favour of a VAT cut paid for by other tax rises.

The revelation, which emerged when the Government mistakenly published an earlier document, formed the centre of Conservative leader David Cameron's attack on Gordon Brown's economic strategy at question time yesterday.

Now his shadow chancellor George Osborne has issued a demand under freedom of information (FoI) laws for the assessments of the move by outside and internal experts to be published.

In a letter to the Treasury's top civil servant, permanent secretary Nick Macpherson, he said: "I would like to request the publication of submissions for the 2008 Pre-Budget Report relating to proposals to increase the rate of VAT to 18.5 per cent in 2011 and/or 20 per cent in 2012.

"The Prime Minister referred to these options on VAT during Prime Minister's Questions on Wednesday November 26, as did the Chancellor in the emergency debate in Parliament on the same day."

He claimed there was a precedent for such a release in last year's row over which of the two main parties first came up with plans to cut inheritance tax - a policy the Tories accused ministers of stealing from them.

The Government then released papers it said showed such a move had been under detailed consideration for much longer - but refused an FoI request to release detailed policy papers on public interest grounds.

"In considering this request, I would like to draw your attention to the precedent set when, following the Prime Minister's reference in Parliament to Pre-Budget Report options on inheritance tax, detailed information was released within 30 days of a Freedom of Information request being submitted," Mr Osborne wrote.

"The information released included details of tax changes considered by Ministers for the 2007 Budget, but not formally announced at that time.

"If there is any refusal to part or all of this request, please provide me with a recommendation of how the request may be modified so as to be granted. I look forward to hearing from you within the required 20 working days," he told Mr Macpherson.

The Treasury confirmed it had received the letter and would be considering the request in the normal way.