Labour and Tories both rule out VAT hike in General Election manifestos | Personal Finance | Finance

Tory and Labour financial bigwigs have both dismissed the notion of VAT increases in the event of their victory in the upcoming General Election on Thursday July 4.

The Tory money man, Chancellor Jeremy Hunt, has sounded the alarm that tax hikes on goods and services could wreak havoc on household budgets as his party rolls out its inaugural campaign poster.

Meanwhile, Labour’s number cruncher-in-chief Rachel Reeves has refuted any suggestion her party would jack up taxes, national insurance or VAT.

Penning his thoughts in The Telegraph, Mr Hunt declared: “I can commit today that, not only will a future Conservative government not increase any rate of income tax or national insurance, but we won’t increase the main rate of VAT for the duration of the next Parliament.”

He threw down the gauntlet to Labour head honcho Sir Keir Starmer to echo this pledge “on camera”.

Mr Hunt also penned: “A VAT increase will hammer families’ finances and push inflation back up, just when we have got it down to normal.”

Inflation in the UK took a dip to 2.3 percent in April, hitting its lowest mark since July 2021 and hovering close to the Government’s aim of two percent, the freshest stats reveal.

The Conservative Party’s spanking new poster features a colossal red piggy bank emblazoned with the message: “If you think Labour will win, start saving..”

It warns that Labour’s economic strategy could slap working households with a £2,094 bill.

But Ms Reeves has blasted Mr Hunt’s claims as “absolute nonsense”.

Her camp argues that the Conservatives are sitting on a £71 billion fiscal abyss within their budget, accusing them of keeping mum on where the funds will emerge from.

Labour’s analysis suggests that Tory pledges could lead to increased borrowing, potentially hiking interest rates and causing a £350 surge in monthly mortgage payments.

Shadow Chancellor Rachel Reeves has firmly stated: “Labour will not be increasing income tax, national insurance or VAT.”

She emphasised her stance on taxation, saying, “I want taxes on working people to be lower, not higher. That is why we opposed the increases to national insurance when Rishi Sunak put those forward as chancellor.”

In recent speeches, Ms Reeves has made it clear that Labour does not intend to introduce new tax hikes, except for their policy to impose a 20 percent VAT on private school fees.

Chancellor Jeremy Hunt has taken credit for Labour’s position, asserting that they have “buckled under pressure” to discard any plans for VAT increases.

Both political parties are shaping their General Election promises amidst difficult economic circumstances. The Institute for Fiscal Studies (IFS) has indicated that the next UK government will inherit the most challenging fiscal situation in seven decades.