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15 June 2010

Simon Hughes fires a warning shot over VAT

Lib Dem deputy leader warns Osborne not to raise “the most regressive tax”.

By George Eaton

Simon Hughes, fresh from his success in the Lib Dems’ deputy leadership contest, has just made a highly significant intervention on tax. In an interview with the Daily Politics, the left-leaning MP signalled his unambiguous opposition to any rise in VAT, which he accurately described as “the most regressive tax”.

He said:

I hope that the Chancellor’s hearing the voices that say VAT is not the right tax to change in the Budget next week.

There is no good reason why Hughes should not get his way. Ignore George Osborne’s flat-out lie that “things are worse than we thought”; the latest figures confirm that he will be able to eliminate the bulk of the structural deficit without any unplanned tax rises.

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Any tax increases (and spending cuts) above and beyond those planned by Alistair Darling are purely ideological. Yet Conservative voices continue to suggest that a 1 per cent rise in VAT, likely to be announced in Tuesday’s emergency Budget, is both desirable and necessary.

Either way, Hughes, with the support of his party’s grass roots, has laid down a clear marker. Should Osborne choose to ignore it, he will risk dividing the Lib Dems and, perhaps, the coalition, too.

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