VAT pain for families as Labour refuse to back SNP amendment

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Families and businesses could be hit after the Tory Lib-Dem coalition defeated attempts to derail its planned rise in VAT to 20% from next January as MPs approved the plans by 321 to 246

The vote followed a lengthy debate in the Commons where coalition Ministers had argued that the tax rise is “unavoidable” if the deficit is to be reduced.


Families and businesses could be hit after the Tory Lib-Dem coalition defeated attempts to derail its planned rise in VAT to 20% from next January as MPs approved the plans by 321 to 246

The vote followed a lengthy debate in the Commons where coalition Ministers had argued that the tax rise is “unavoidable” if the deficit is to be reduced.

However Labour has been attacked after refusing to back an SNP amendment that would have brought relief for households and businesses.  Labour MPs abstained on the SNP amendment and instead tabled their own that sought simply to delay the introduction of the increase and exempt groups such as charities.

SNP Treasury spokesperson Stewart Hosie MP has hit out at all three London parties after the votes and criticised Labour for refusing to back the SNP amendment.

Commenting, Mr Hosie said:
“The Con/Dem coalition’s decision to proceed with this rise is economically illiterate. This increase in VAT will cause real pain for households and businesses, and hinder economic recovery.

“For Labour MPs to sit on their hands and abstain on this vote is absolutely unforgivable. First Labour let the Tories into government, and now they are standing back while the Tories and Liberals impose savage cuts and painful tax hikes. This failure will haunt the Labour Party in Scotland for years to come.
 
“The poorest families will be hardest hit with some estimates suggesting their VAT bill will go up by £31 a week. Unemployment benefit will be reduced in real terms, tax credits cut and massive pressure put on housing benefit, particularly in areas where rented housing is expensive.

“Increasing VAT will put a strain on our public services at a time when they need support more than ever. The NHS in Scotland, for example, will be hit by a £26m hike in the VAT bill.
 
“The VAT increase also piles the pain on businesses already struggling through Labour’s recession – taking spending power out of the economy and exacerbating cash flow problems.
 
“The Tories and the Liberals have already endangered the recovery by cutting too far and too fast. The decision to increase VAT is a political choice and it is a wrong choice.”

None of the three London parties had ruled out a VAT rise prior to the general election.  However the Lib-Dems had specifically argued against such a rise, saying they would amount to a “VAT bombshell”.

Chancellor George Osborne has claimed that raising VAT from 17.5% to 20% will bring in £13bn which will be needed in order to start reducing the £155bn deficit left behind by Labour.

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