VAT rise 'dropped just days ago'
VAT rise 'dropped just days ago'
The PM and Mr Darling dropped the proposal for an 18.5% VAT rate |
A rise in Value Added Tax to 18.5% was in the government's plans until less than a week ago, the BBC understands.
A Treasury document published online by mistake showed it considered introducing the rise from 2011. The Treasury says it was later rejected.
The government is to cut VAT from 17.5% to 15% for 13 months to boost spending.
The Tories say the document shows plans for a "secret tax bombshell". The Lib Dems said ministers might be retaining a rise as a post-election option.
VAT is to be reduced from next Monday and return to its current rate on 31 December 2009, under measures aimed at boosting the economy outlined in Monday's pre-Budget report.
'Fairest options'
But the Treasury note accompanying an order to Parliament, published on a government website, said VAT would "subsequently increase to 18.5% in 2011-12".
BBC political editor Nick Robinson said he had been told the VAT hike was in the government's plans until less than a week ago - when Prime Minister Gordon Brown and Chancellor Alistair Darling met to consider their pre-Budget options.
There's a secret tax bombshell coming down the road at every family in the country David Cameron |
They decided not to go ahead with it but to increase National Insurance and a introduce a new 45% top rate on income tax instead.
A Treasury spokesman said the VAT hike was "an option that was considered and rejected".
He said the chancellor had made it clear in his pre-Budget statement to Parliament that "a number of options to raise revenue in future years" had been considered and he had "chosen those which are fairest".
But the Conservatives say there is a "black hole" in the government's plans to repay record borrowing, which would have been filled by a 1% VAT rise.
'Scaremongering'
Party leader David Cameron told the BBC: "That's why the budget doesn't add up, that's why there's such a big black hole, that's why everyone is saying this budget isn't convincing and it isn't.
"There's a secret tax bombshell coming down the road at every family in the country."
Treasury minister Angela Eagle said publication of the document had been "a pure administrative error" adding: "For anyone to think it is anything else is complete scaremongering and opportunism of the worst sort."
MPs will discuss the pre-Budget report for three hours on Wednesday, after shadow chancellor George Osborne secured an emergency Commons debate.
If they do need to raise more revenue either before the election or after it - this will almost certainly be the preferred course Vince CableLib Dems |
He had said it was a "disgrace" that MPs were not allowed to debate Mr Darling's "reckless gamble".
The chancellor unveiled plans to take borrowing to record levels, cut VAT and cut public spending growth to try to boost the economy and stave off a long recession.
He told the BBC on Tuesday that people earning more than
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