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May pledges not to increase VAT, quiet on other taxes

British Prime Minister Theresa May said on Sunday she would not increase value-added tax (VAT) if her Conservative Party was elected on June 8, but she did not extend the same promise to other major taxes.

Heading into an early election that is likely to increase her parliamentary majority before Britain quits the European Union, May has been under pressure to look beyond Brexit and detail her approach to tax and spend policies.

Speaking in her first television interviews of the election campaign, May said her party had no plans to raise the overall tax level and that she would not raise VAT, a form of consumption tax that now stands at 20 percent.

“We won’t be increasing VAT,” she told ITV’s Peston on Sunday show. “If you look across what we want to do on taxes, we’ve no plans to increase the level of tax, as I say it’s the Conservative Party, we’re a party that believes in lower taxation.”

But, she refused to recommit to a 2015 election promise made by her predecessor David Cameron not to increase VAT, income tax, or National Insurance – an employment tax – until 2020.

The leftist opposition Labour Party, which has also ruled out raising VAT, said May could not be trusted to honour her VAT pledge. Election spokesman Andrew Gwynne said May posed “a threat to working people, pensioners and our public services.”

Polls show May is on course for victory in the election, although three published late on Saturday showed her lead had shrunk.

Britain’s Chancellor, Philip Hammond, has argued that the 2015 tax pledge had limited his ability to manage the economy.

Britain’s deficit is expected to rise in the 2017/18 financial year, as one-off factors that helped the government last year – such as changes in the timing of payments to the EU budget and the impact of changes on dividend taxation – unwind.

(Reporting by William James, editing by Elizabeth Piper, Larry King)

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