Conservative and Labour finance policy chiefs have ruled out VAT hikes if either party wins the General Election in a bid to protect family finances.
As the official five-week election campaign starts, both parties have ruled out any increases to income tax, national insurance or VAT.
Jeremy Hunt, Conservative chancellor, has warned rises to taxes on products and services could “hammer families’ finances”, as his party unveils its first election poster.
Writing in The Telegraph, Hunt said: “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.”
Rachel Reeves, Labour’s shadow chancellor has also denied her party has plans to raise tax, national insurance or VAT.
She ruled out a VAT hike, dismissing a claim she had planned to raise it as "nonsense".
The General Election is on July 4
GETTYThese pledges comes as the two main parties traded blows over their spending plans in the run up to the General Election on July 4, 2024.
Hunt urged Labour leader Sir Keir Starmer to make a similar commitment about hiking tax “on camera”.
Labour has pledged economic stability if it wins the election and had explicitly ruled out raising income tax if it enters office.
On Tuesday, Reeves said she was not planning further tax rises beyond those it has already announced.
Labour has already announced a plan to charge VAT on private school fees in order to raise funds it intends to use to hire more state school teachers. Private schools currently do not have to charge VAT on their fees.
Hunt stated he would not increase VAT as this "will hammer families’ finances and push inflation back up, just when we have got it down to normal".
UK inflation slowed to 2.3 per cent in April, the lowest level since July 2021 and near the Government’s two per cent target, according to the latest figures.
City analysts also expect the Bank of England base rate to come down this summer from its current level of 5.25 per cent.
The Conservative Party’s new poster bears a giant red piggy bank bearing the words: “If you think Labour will win, start saving…”
It claims Labour’s fiscal plans would cost working families £2,094, but Reeves said Hunt’s words were “absolute nonsense”.
Her party claims the Conservatives have a spending black hole in their plans worth £71billion, where the Tories have allegedly failed to say where the money will come from.
Tory pledges would, according to Labour analysis, result in borrowing to plug the gap, which could in turn raise interest rates, resulting in a monthly mortgage payment increase of £350.
Both parties are making their General Election pledges against a challenging backdrop.
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Both parties have accused each other's spending pledges of shortcomings and having multi-billion pound black holes
GETTYBoth parties have accused each other's spending pledges of shortcomings and having multi-billion pound black holes.
The Institute for Fiscal Studies (IFS) said the next UK government will face the toughest fiscal inheritance in 70 years and that the state of public finances hangs over the election campaign "like a dark cloud".
The IFS warned that high interest payments on existing debt and low expected economic growth could make reducing future debt more difficult – whichever party is in government – without further measures.
