John
01-03-2011, 02:28 PM
Tomorrow's rise in VAT will cost families an extra £389 a year, Labour has claimed, as retail experts warn it will have a negative impact on sales.
Campaigning in the Oldham East and Saddleworth constituency ahead of next week's by-election, Ed Miliband said the increase was evidence the coalition's cuts are going "too far and too fast".
The Labour leader said the 2.5% increase would hinder economic growth, cost thousands of jobs and make it even harder for families to make ends meet.
He warned: "Tonight, at midnight, Downing Street will come to your street, to the High Street, to every street up and down this country.
There will be higher VAT when you fill up your car on the way to work, they will tax you more when you phone home because your mobile phone bill is going up because of higher VAT, they will be taxing you higher when you purchase a cup of coffee and when you pick up a DVD on the way home for the kids.
"It is the wrong tax at the wrong time for the economy."
The figure of £389 a year is taken from a Lib Dem poster from the last general election campaign.
Mr Miliband said it underlined the "broken promises" of Deputy Prime Minister Nick Clegg and the wider Government.
But Chancellor George Osborne defended the rise, saying: "VAT is a powerful weapon to tackle debt and if we don't use it then the spending cuts would be over £13bn bigger.
"When Labour was in government they accepted this, which is why Alistair Darling says he wanted to put up VAT.
"Now Labour is in opposition, Ed Miliband has shown weak leadership by jumping on the bandwagon of opportunism."
It comes as a report by the Centre for Retail Research and online shopping group Kelkoo claimed the VAT rise could cause a drop in spending worth £2.2bn in the first three months of the year.
Richard Lim from the British Retail Consortium said: "With the weather and weak consumer confidence undermining the sector's performance in the run-up to Christmas, retailers are discounting in a big way now to make up for missed sales.
"That may mean the impact of the VAT rise is lost amongst discounts, but ultimately retailers can't absorb the cost indefinitely."
However, Sky's Midlands correspondent Darren Little said: "The VAT rise is relatively small, adding £2.50 to the price of goods previously selling for £100.
"The rise will though have an effect on motorists, added to the January 1st fuel duty increase, a litre of unleaded and diesel has increased by more than 3.5p.
"Many items like food and children's clothing are exempt from VAT and reduced rates will remain on items such as children's car seats and supplies of domestic fuel and power."
The Lib Dems are also stepping up their campaign in Oldham East and Saddleworth with six ministers visiting this week, including Mr Clegg for the second time.
Former leader Charles Kennedy, deputy leader Simon Hughes and party president Tim Farron will also be campaigning in the seat which Lib Dem candidate Elwyn Watkins lost by only 103 votes last May.
David Cameron has pledged to visit, though there are suspicions the Tories are not mounting a serious challenge in the seat in order to give the Lib Dems a better chance of victory.
However, Liberal Democrat deputy leader Simon Hughes has insisted there is "no deal" with the Conservatives.
Asked if there had been an understanding that Conservatives would help Lib Dems
win the by-election, Mr Hughes told BBC Radio 4's Today programme: "There hasn't, and when I was there last week the Conservative chairman was there campaigning... there were Conservatives I saw out there in vans putting up boards and posters."
Source - Yahoo.
Campaigning in the Oldham East and Saddleworth constituency ahead of next week's by-election, Ed Miliband said the increase was evidence the coalition's cuts are going "too far and too fast".
The Labour leader said the 2.5% increase would hinder economic growth, cost thousands of jobs and make it even harder for families to make ends meet.
He warned: "Tonight, at midnight, Downing Street will come to your street, to the High Street, to every street up and down this country.
There will be higher VAT when you fill up your car on the way to work, they will tax you more when you phone home because your mobile phone bill is going up because of higher VAT, they will be taxing you higher when you purchase a cup of coffee and when you pick up a DVD on the way home for the kids.
"It is the wrong tax at the wrong time for the economy."
The figure of £389 a year is taken from a Lib Dem poster from the last general election campaign.
Mr Miliband said it underlined the "broken promises" of Deputy Prime Minister Nick Clegg and the wider Government.
But Chancellor George Osborne defended the rise, saying: "VAT is a powerful weapon to tackle debt and if we don't use it then the spending cuts would be over £13bn bigger.
"When Labour was in government they accepted this, which is why Alistair Darling says he wanted to put up VAT.
"Now Labour is in opposition, Ed Miliband has shown weak leadership by jumping on the bandwagon of opportunism."
It comes as a report by the Centre for Retail Research and online shopping group Kelkoo claimed the VAT rise could cause a drop in spending worth £2.2bn in the first three months of the year.
Richard Lim from the British Retail Consortium said: "With the weather and weak consumer confidence undermining the sector's performance in the run-up to Christmas, retailers are discounting in a big way now to make up for missed sales.
"That may mean the impact of the VAT rise is lost amongst discounts, but ultimately retailers can't absorb the cost indefinitely."
However, Sky's Midlands correspondent Darren Little said: "The VAT rise is relatively small, adding £2.50 to the price of goods previously selling for £100.
"The rise will though have an effect on motorists, added to the January 1st fuel duty increase, a litre of unleaded and diesel has increased by more than 3.5p.
"Many items like food and children's clothing are exempt from VAT and reduced rates will remain on items such as children's car seats and supplies of domestic fuel and power."
The Lib Dems are also stepping up their campaign in Oldham East and Saddleworth with six ministers visiting this week, including Mr Clegg for the second time.
Former leader Charles Kennedy, deputy leader Simon Hughes and party president Tim Farron will also be campaigning in the seat which Lib Dem candidate Elwyn Watkins lost by only 103 votes last May.
David Cameron has pledged to visit, though there are suspicions the Tories are not mounting a serious challenge in the seat in order to give the Lib Dems a better chance of victory.
However, Liberal Democrat deputy leader Simon Hughes has insisted there is "no deal" with the Conservatives.
Asked if there had been an understanding that Conservatives would help Lib Dems
win the by-election, Mr Hughes told BBC Radio 4's Today programme: "There hasn't, and when I was there last week the Conservative chairman was there campaigning... there were Conservatives I saw out there in vans putting up boards and posters."
Source - Yahoo.