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An increase in VAT is unacceptable

Last year I listed four conditions for supporting tax rises. The first was the most important:

"Possibilities for spending cuts have been exhausted."

I've just written a piece for Comment is free arguing that in, at least, four areas of public spending the Government has not cut out the fat:

  1. Most notable is the failure to include the NHS in the pain of repaying Labour's borrowing. If the Coalition adopted the recommendations of the 2020Health think tank they could save £12bn "without stopping a single operation". As Andy Burnham said last week, it is "irresponsible" NOT to include the NHS in the spending restraint. We need frontline services, not the whole bloated NHS budget, protected.
  2. Another issue is the failure to end the poorly-targeted benefits introduced by Gordon Brown as part of his attempt to create a dependent population, inclined to always vote 'Left'. The Winter Fuel Payment - costing £2.7bn pa - is a good example of this. As Simon Less reminds us today, only 18% of households in receipt of WFP are in fuel poverty. We can't afford it and other benefits that go to the wealthy.
  3. Then there is the whole Barnett formula. The left-leaning IPPR has described the fact that people in Scotland receive £5,676 per head from the UK taxpayer and people in Wales receive £5,050 per head, compared to the resident of England getting just £4,523 as "inequitable". I can think of stronger words! Why should people in Wales get free NHS prescriptions and Scottish students not pay tuition fees courtesy of English taxpayers? Are we really all in this together? Recent research suggests the extra funding enjoyed by Scotland's NHS, for example, is not producing any benefits to patients. The Tory leadership's pursuit of Scottish, state sector votes should not be at the expense of fairness for England's poorest communities. We need a new UK-wide settlement that targets need more effectively. Unfortunately the Coalition disagrees.
  4. Fourthly is the net, annual payment of £6bn to £7bn that we make every year to the unaudited EU budget. We learn today from The Telegraph that 1,023 Eurocrats earn bigger salaries than the British Prime Minister. Until the EU gets its house in order we shouldn't be shipping so many pounds to €uroland.

No taxes should go up until spending issues like the above have been addressed. Britain's fundamental problem is its bloated state. We are not under-taxed.

On CentreRight, Matt Sinclair has set out two additional reasons why an increase in VAT would be wrong. First, it hurts the poor most of all and, second, both the Conservatives and the Liberal Democrats said they had "no plans" to increase this tax. At a time when trust in politics is so low we don't need "plans" to emerge tomorrow.

Tim Montgomerie


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