I’m unconvinced that a cut in the VAT rate will be that big a political winner for Labour. First VAT is a hidden tax, a lot of the time people don’t realise they are paying it as it is incorporated in the price. Second, sterling’s weakness means that imports are going to become more expensive regardless of this cut.
The attraction for Brown, in purely partisan terms, is that it throws the Tories for a loop. Note how David Cameron couldn’t say whether he opposed or supported it on Marr this morning (his, reasonable, explanation was that he had to see the details of the scheme first). Labour will also have noted with relish Ken Clarke’s support for the idea.
It seems, though, that the Tory response to the PBR will not focus on the details but on the broader question of Brown’s trustworthiness. AsDavid Cameron tells Dominic Lawson in The Sunday Times:
“Of course the prime minister will try to paint one of his famous dividing lines because he sits in Downing Street endlessly scheming up dividing lines.
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