It’s a strange day when the TaxPayers’ Alliance and the TUC are singing from the same hymn street. It’s even stranger when Guido and Ed Balls find themselves in agreement. The TPA have finally engaged in the battle this morning with a video attacking a prospective VAT rise. Guido can’t understand the morality of instigating a regressive tax rise that will mean more, not less, state dependency, leaving those who already suffer the most being even more broke. A hike in VAT to 20% would cost someone on average earnings £150 a year, that may not be much to millionaires like Dave, George or Nick, but those on lower incomes will definitely feel the pain.
The Coalition simply has no mandate to raise VAT, they were all asked repeatedly during the election campaign and replied they had “no intention” of raising VAT. Clegg actually campaigned against a VAT hike.
A 2.5% rise in VAT to continental levels is not worth the hassle, not when there are far more effective ways of saving money rather than further taxation. Why not start with the disastrous outsourcing of I.T. contracts? A study of government I.T. contracts made over the past 5 years shows that the taxpayer has ended up paying 40% or more above the market rates for outsourced services. This means the public sector could save up to £6 billion on its annual I.T. spend of around £14 billion without affecting front line services. Overspending on government I.T. contracts alone is equal to 1% of GDP…
UPDATE: The TPA’s video: