Fury at 'secret VAT increase'
David Cameron has accused Gordon Brown of planning a secret "tax bombshell" after it emerged that the Treasury had considered raising VAT by 1% to 18.5% following the General Election.
A document mistakenly published on the internet stated that the increase would come in 2011, to help pay for a 13-month reduction in the main VAT rate from 17.5% to 15% starting on December 1.
The Treasury said the draft background note was drawn up last week ahead of Monday's Pre-Budget Report but should never have seen the light of day.
Chancellor Alistair Darling considered the proposal but rejected it, said a spokesman, who insisted there were no current plans for an increase in VAT rates.
But Conservatives claimed the paper was proof that Labour was planning to increase taxes following the election, expected in 2010, in a way that would hit every family in the country to the tune of about £200 annually.
The row has blown up ahead of a debate in the House of Commons on the dramatic measures announced on Monday, including a £20 billion fiscal stimulus to restore growth, a new 45% top rate of income tax for high earners and a 0.5% increase in National Insurance in 2011.
The Tories claimed there was a £10 billion "black hole" in the Government finances for 2011-12 set out in the PBR.
And Mr Cameron suggested that Mr Brown and Mr Darling may be secretly planning to use a VAT hike to fill the gap.
The Tory leader said: "The Prime Minister specifically said, 'No hidden manifesto, everything above board'. And yet now we know they are planning a secret tax bombshell, a VAT hike that would hit every single family in the country after the election. That's why the budget didn't add up."
Treasury minister Angela Eagle dismissed his claim as "scaremongering," saying: "It is a pure administrative error on the part of HM Revenue and Customs."
