Labour call to scrap fuel VAT

In press conference on Labour’s economic vision, Ed Miliband and Ed Balls claim repeating bank bonus tax would bring in £2bn Labour hopes to pressurise the chancellor into shelving the VAT rise on fuel by forcing a vote on the issue on Wednesday, forcing Tory and Lib Dem backbenchers to decide whether to join with the opposition to encourage relief for motorists and hauliers. The opposition want the government to shelve VAT on fuel, as petrol prices have risen to over 130p per litre, the VAT rise adding 3p. In a joint press conference by Ed Miliband and Ed Balls, the shadow chancellor said he had paid £74.50 to fill up his own family’s car over the weekend and that most people were struggling with a rise in the cost of living. MPs on all sides of the political spectrum are concerned. Asked whether the EU would block the UK from cutting VAT on fuel, Balls referred back to the success of then chancellor Ken Clarke who in 1995 cut VAT on fuel and said that had been “perfectly legal”. Though he said the government does have to go through the proper European procedures, the Treasury has already done so to cut VAT in rural areas. Ahead of the budget next week, Miliband and Balls set out how they would fund the hole in finances left by reversing the VAT rise on petrol, and begin stimulating activity for the UK economy – putting forward plans that could create 115,000 jobs. Their tests for next week’s budget, they said, included whether the chancellor took steps to relieve the pinch on living standards, and whether they set out a clear plan for growth. Labour’s central proposal is that the government to repeat last year’s bank bonus tax – which despite expectations, raised £3.5bn. Cautiously estimating the fresh tax could bring in £2m, they suggested: • establishing a £600m youth unemployment fund which they say would help more than 90,000 young people into work. • providing £1.2bn to fund the construction of 25,000 affordable homes which would also serve to shore up the “faltering” construction industry which, they said, had lost 27,000 jobs in the last year. These plans would generate 20,000 jobs, they claimed. • providing a funding stream for regional businesses by boosting regional growth fund by £200m. Miliband said: “We are under no illusions that at this stage the government will abandon their deficit reduction plan – they are too dug in for that. “But at least they should take some steps to deal with faltering growth in our economy – to start to establish a plan to create jobs in the private sector … to deal with the crisis of youth unemployment in our country and build the skills we need for the future. “The tests for next week’s budget are clear – growth and living standards. But the signs aren’t good that they will be met. The government should think again.” The Tories released a dossier totting up Labour’s spending commitments and said they believed the opposition had now made £12bn worth of uncosted commitments. Assertions from the government that Labour’s plans were unfunded were “total utter garbage and claptrap”, Ed Balls said. Though Labour would not raise VAT on any products, in the run up to the budget they are concentrating on getting the government to reverse just the VAT rise on petrol. The shadow chancellor underlined that a Labour government would still be sticking to the former chancellor Alistair Darling’s plan to halve the deficit by the end of the current parliament. He took on suggestions Darling’s plan to have the deficit was only £2bn less than Osborne’s plans. The government claims that Darling’s plans would have meant cuts of £14bn this year which are only £2bn less than George Osborne’s £16bn. Balls said these took no account of the fact that circumstances had changed since Darling produced his forecast and borrowing was £20bn lower than expected. However he stopped short of saying how that would be used, only suggesting it would have insulated a Labour government from having to make the cuts the government is now making. Balls said it was “complete nonsense” to claim that a Labour government would have been cutting spending by almost as much as the coalition. Labour Ed Miliband Ed Balls Economic policy Petrol prices Budget Tax and spending Allegra Stratton guardian.co.uk

Posted by on March 14, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.