Tories and Labour vow to freeze VAT

The “working families” that the government nodded to at Budget 2017 at the expense of contractor dividends reappeared at the weekend, as the voters Theresa May most wants to help.

The prime minister used an interview to declare that the Conservatives “absolutely want to reduce taxes” on such families, likely to mean low and middle-earning households.

But unlike the last time that this large swathe of the electorate was wooed by the Tories -- in March, amid a cut to the dividend allowance -- there was no accompanying attack on PSCs.  

By contrast, such firms will welcome a new vow to freeze Value Added Tax bills, as Mrs May told ITV’s Peston on Sunday: “In relation to specific taxes, we won’t be increasing VAT.”

The unexpected pledge on VAT came after John McDonnell, Labour’s shadow chancellor, made the same commitment, and invited the programme to quiz the PM on her plans for VAT.

As Mrs May made no mention of the VAT freeze hours earlier, when grilled by the BBC, Labour sources believe it has successfully bounced” the Tory leader into making an “unplanned promise,” the Guardian reported.

However, a poll obtained by yesterday’s Times newspaper indicates that the Tories are still the party to beat when it comes to the business vote, with owners being more than three times more likely to back Conservative than Labour on June 8th.

Commissioned by Funding Circle, the poll reportedly found that 41 per cent of enterprise owners intend to vote Tory, compared with only 13 per cent who plan to back Labour and 9 per cent saying they will vote Liberal Democrat.

Labour’s lack of support among company bosses follows a pre-manifesto pledge on Friday to put up corporation tax -- by as much as 8% -- to fund a £1.5bn spending injection for the NHS.

It is the 12^th time that Jeremy Corbyn’s party has called for a business tax rise, reported The Sun, to fund – fittingly -- 12 spending commitments, like health and social care but not business.  

An online campaign to mould the party’s upcoming manifesto also omits enterprise, with none of Mr Corbyn’s 10 pledges to “rebuild and transform Britain” relating to business.

But offline, his 12 spending commitments (which the Centre for Policy Studies says raise enough to raise corporation tax to 27% by 2020), still have time to sway the 21% of Funding Circle respondents who declined to reveal their intentions on voting day.

As to her intentions, except for her fresh vow not to take VAT above 20% for five years, Mrs May remains standoffish about renewing the ‘triple lock,’ which is set to expire in 2020.

Seeming to hint that the personal allowance could be further notched up to offset any new rise in income tax and National Insurance, the PM told BBC1’s Andrew Marr Show:

“We have no plans to increase the level of tax but I’m also very clear that we don’t want to make specific proposals on taxes unless I’m absolutely clear that I can deliver on those.”

Her statement alludes to the embarrassing U-turn that Philip Hammond, the chancellor, was forced into on NI for the self-employed, but chimes with his reported belief that the triple lock is restrictive.