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Government Economic and Social Policy

Part of Orders of the Day — Opposition Day – in the House of Commons at 7:26 pm on 9th June 1993.

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Photo of Mr William Ross Mr William Ross , East Londonderry 7:26 pm, 9th June 1993

I am glad that I have the support of the hon. Member for Great Grimsby (Mr. Mitchell), although those on his Front Bench do not share his very sensible views on the matter.

That position on the ERM is a good start, but it is not the end of it. The Government understand that they have to raise taxes and a number of speakers have touched on that today. One speaker drew attention to something that I never could understand: why do the Government take three or four bites at the same bitter lemon? They tell us that they are to impose VAT on fuel next year, and they get bad publicity. They will get another dose of bad publicity next April when the 8 per cent. increase takes place. And they will get a third dose when the 17·5 per cent. increase is completed the following year. If they are to do something nasty to people, they should do it once and get it over and done with. However, if the Government want to bring continuing pain on themselves, that is their worry and not mine.

My objection to the imposition of VAT on fuel is twofold. First, the increase will bear heavily on the lower paid. There will always be people who will be severely hurt by the measure, no matter how much the Government raise social security payments to cover the unemployed and the poorer sections of the community. My second point is more far-reaching: the Government have cleared the way for further increases and changes in the scope of VAT. Having once breached the zero VAT rule that has prevailed for many years, they may go on and start slapping VAT on other items in future years. That is something that no hon. Member would wish to contemplate.

If the Government want cash, they should do as I suggested in my speech on the Budget —increase income tax. It is flexible, it provides instant money and, as soon as the economic conditions allow, it could be easily reduced again. The VAT increase will be very difficult to get rid of once it has been imposed.