DAVID Cameron has ruled out any VAT rise under a Conservative Government in a move which pulled apart Ed Miliband’s election strategy.
The Labour leader was left reeling after Mr Cameron gave the VAT promise in the last Prime Minister’s Questions of the parliament.
Mr Miliband this week launched a Tory VAT threat election poster and had based a large part of this upcoming election strategy on a predication that the Tories would have to raise VAT in order to balance the books.
But instead Mr Miliband was left having to rule out his own tax rise, in National Insurance contributions, as the Prime Minister gave “a straight answer to a straight question” and promised no VAT hit after the General Election.
Amid uproar in a packed Commons chamber, the Labour leader attempted to regain the initiative by insisting that no-one would believe the PM’s promise - but declined several challenges to follow Mr Cameron’s example by ruling out National Insurance rises if Labour wins power.
After the disastrous PMQs showing, in which Mr Miliband failed to land a blow in the face of triumphant Tory MPs, the leader met privately with shadow chancellor Ed Balls to set out a clear Labour line on tax.
Mr Balls later said he had already promised last year not to raise National Insurance contributions, though this message appeared not to have reached Mr Miliband as he repeatedly refused to rule out a rise during the PMQs exchanges.
The tit-for-tat declarations will deprive an incoming administration of either colour of significant sources of revenue as they seek to balance the books following the general election.
But they also close down major vulnerabilities in the election campaign.
Mr Balls said: “We will make it clear in the manifesto Labour will not be raising National Insurance. That will be a clear pledge from us.”
He added: “People will not believe promises from Cameron not to raise VAT.
“They promised not to raise VAT in 1978, Norman Lamont did the same in 1992, and David Cameron and George Osborne did the same in 2010 and each time Conservatives have increased VAT.”
Mr Cameron’s announcement - in response to a direct challenge from Mr Miliband - appeared to catch the Labour leader by surprise, coming just a day after Chancellor George Osborne had refused to give such an assurance to a Commons committee.
Instead it was Mr Cameron who was able to go on the offensive repeatedly pressing the Labour leader to rule out an increase in NI contributions, which he declined to do.
The exchanges were greeted with huge cheers by Tory MPs who were jubilant at the way the Labour leader had been so comprehensively wrong-footed.
The questioning opened with a challenge by Mr Miliband to rule out a rise in VAT to which, Mr Cameron said he would give a “straight answer”, adding “the answer’s yes”.
Amid raucous scenes, the Labour leader retorted: “Nobody is going to believe him because of his extreme spending plans.”
A senior Labour source said that Mr Cameron had repeatedly said he had no plans to raise VAT before the 2010 election, only for Mr Osborne to increase it once the coalition was in place.
“It is not the first time they have been less than candid about raising VAT. It risks not being the last either,” the source said.
“No-one is going to believe a word they say about this. They are in a post-Budget panic.”
Tory chairman Grant Shapps said this suggested that Labour would impose tax rises of £15 billion if it won power.
“Labour are in chaos on tax,”Mr Shapps said.