Finance Bill

Debate between Ian Swales and Lord Campbell of Pittenweem

Tuesday 28th June 2011 Commons Chamber

[Ian Swales]

The hon. Gentleman has strayed off the topic of the new clause, but on my party’s policy on VAT, obviously we are between a rock and a hard place, due to the economic state of the country. We had some very difficult choices to make, and a progressive expenditure tax is the right answer.

[Sir Menzies Campbell (North East Fife) (LD)]

My hon. Friend points out that difficult choices had to be made; indeed, they would undoubtedly have had to be made if a Labour Government had been returned. Does he recall that it was the policy of the last Labour Chancellor of the Exchequer to raise VAT to 19%?

[Ian Swales]

I thank my right hon. and learned Friend for reminding me of that fact. One of the things that have been absent from Labour Members is alternative policies to those being pursued by the Government.

The week after VAT was reduced by 2.5%, Cristiano Ronaldo, the premiership footballer, saved £4,000 on the cost of his new Ferrari. He will also have made massive savings on many of his other purchases during that period. I doubt whether any constituent of mine saved £4,000 as a result of VAT being reduced.

VAT as applied in this country is a progressive tax on spending. The more people spend, the more they pay, so the inconvenient truth is that cuts in VAT benefit people in proportion to how wealthy they are.