Theresa May rules out raising VAT over next five years… but National Insurance could go up
Prime Minister makes first tax announcement of the General Election campaign
THERESA May yesterday ruled out raising VAT for the next five years — but opened the door again to the prospect of hikes in National Insurance contributions.
The Prime Minister made her first tax announcement of the General Election campaign as she promised not to raise the sales tax above its current 20 per cent rate.
She also signalled moves to bring in further income tax cuts and tax breaks to help people save to pay for OAP care.
But she twice refused to commit a future Tory government to the Tax Lock pledged by predecessor David Cameron two years ago that forbids any rise in NICs.
Her comments open the door to the Chancellor resurrecting his disastrous bid to hike NICs for the self-employed, branded a tax grab on White Van Man.
Philip Hammond was forced into a U-turn after asking for 2p more from every £1 in his Budget in March.
As the election fight entered week three and the battleground turned to tax, it also emerged that the Tories may bring in tax rises for very wealthy when they flog their multi-million pound houses.
Labour has also promised not to raise VAT and suggested a new tax on the well-off.
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Speaking to BBC1’s Andrew Marr Show, at which she was accompanied by armed cops, Mrs May said: “We absolutely want to reduce taxes for working families.”
Sources said that means she is ready to recommit to keep raising the income tax personal threshold to £12,500 in the Tory Party manifesto, which is scheduled to be unveiled a week today.
But critics said the PM’s silence on sticking with Mr Cameron’s Tax Lock revealed her clear intention to dump it.
She insisted she has “absolutely no plans” to raise the level of tax.
But she appeared to come clean on the pledge by saying: “I’m also very clear that I don’t want to make specific proposals on taxes unless I’m absolutely sure that I can deliver on those”.
In another big hint about the major offerings in the party’s manifesto, the Tory leader also named the spiralling costs of Britain’s ageing population as “exactly the sort of long-term issue that I want to address for the future”.
It was revealed yesterday that Tory aides are studying plans to bring in tax breaks to help workers fund the care of elderly relatives in a scheme similar to childcare vouchers.
Workers could also be able to sacrifice some of their wages tax free to save for their own care costs in old age.
The moves are being drawn up to help the “sandwich generation” of today’s middle-aged, who are forced to look after both their children and their parents.
Mrs May also issued a big hint that she is preparing to abandon the vastly expensive Triple Lock on pensions rises.
Under a policy brought in by the Coalition Government in 2010, pensions have risen by whichever was highest out of average annual earnings, inflation or 2.5 per cent.
But with ever-more old people, the bill for it has spiralled and left less money to spend on younger generations, who have been shown in studies to be struggling more.
Quizzed on whether she will keep the Triple Lock, Mrs May said: “Under a Conservative government, the state pension will still go up every year of the next parliament.”
But crucially, she added: “Exactly how we calculate that increase will be for the manifesto, and as I just said, you’ll have to wait for the manifesto to see what’s in it.”
The PM also called the June 8 Election the “most important of my lifetime” due to vast gulf in styles and policies between her and Jeremy Corbyn.
Shadow Chancellor John McDonnell vowed not to raise income tax on “middle and low earners”. He instead said: “The only increases will be on the higher percentages.”