VAT RISE IS PERMANENT: 50% INCOME TAX RATE TEMPORARY

Mr Osborne, back from his estimated £11,000 (over twice the annual retirement pension) holiday in millionaire playboy ski resort Klosters has said that he considers the VAT rise to 20% to be permanent, and has indicated that he would rather reduce income tax rates than reduce VAT, and that the 50% rate Income Tax is a temporary measure. OK, that throws up a couple of points.

Last night I saw some Liberal Democrat blokey in Oldham and Saddleworth pointing out that the VAT rise was an unfortunate but necessary step taken reluctantly by the coalition, totally unforeseen by either party, prior to the election (which would explain why they both said they had no intention of raising VAT).

It was, said this blokey (whose name I didn’t get), on the BBC tea time news, all down to Labour leaving the country in such a terrible mess.

When pressed on the fact that the Liberals had said that they would not raise VAT, he said that they wouldn’t have done if they had been living in some parallel universe where the country’s finances weren’t in such a mess, but they hadn’t known about that before they won power. This begs the question, why was Vince Cable going on and on about the parlous state of the finances, indeed the only person to do that, if the Liberals didn’t think they were that bad?

Ideologically the Tories prefer a sales tax to a tax on income. Mrs Thatcher took VAT from 8% - 15% and reduced income tax in her first year in office. Mr Major put a further 2.5% on in 1991. In 1994 the Tories put an 8% VAT on domestic heating, which was reduced by Labour in 1997.

Before this election Mr Osborne said that his party had no intention of raising VAT, yet within a few weeks of taking up office he had announced his intention of making the standard rate 20% in order to pay down the deficit left by Labour. And now, on the first day of its operation, it has become a permanent feature.

Is this Osborne’s way of getting back the tax breaks for the criminally low paid under £10,000 a year, whom the Liberals have pushed them to exclude from tax over the next five years?

So to all the ordinary people who voted Conservative (or Liberal) you should be aware that unless you earn over £150,000 a year, you will be subsidising the rich with your increased VAT payment.

(As an afterthought, it is also a matter of not inconsiderable shame that it is likely that in a single week just before Christmas, while Mr Osborne was preparing to leave on that holiday, it is estimated that over 2,500 people in England and Wales died as a direct result of the cold. I have no comparable figures for Scotland, but last winter 2,900 people died of the cold.)

I hope you enjoyed Klosters Mr Osborne.