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Value Added Tax

Volume 524: debated on Wednesday 9 March 2011

11. What discussions he has had with the Chancellor of the Exchequer on the effect on the economy in Scotland of the increase in the standard rate of value added tax. (44085)

The Secretary of State and I have regular discussions with the Chancellor of the Exchequer on a range of issues. The VAT rise is a tough but necessary step towards Britain’s economic recovery.

Is the Minister aware of the sense of outrage throughout Scotland that on this Government’s watch, the increase in VAT means that low and middle-income families now pay a higher rate of tax on purchases and earnings than the banks are to pay on their profits? How can that possibly be fair, and why do the Government continue to insist that those with the least should pay the most?

I am aware of the sense of outrage, not just in Scotland but throughout the UK, at the state of the economy that the last Labour Government left us with, which has required such measures to be taken.

Does the Minister not accept that the recent increase in VAT, particularly on fuel such as petrol and diesel, is having a more dramatic effect on the economy in rural areas? Does he not think that his Government should address that?

The hon. Lady would be much more credible on that point if she had spoken out against her Government’s rises in duty. The issue of fuel prices in rural areas is serious, and it is already clear that my right hon. Friend the Chancellor has heard the concerns.