Backdoor tax rises attacked

The disabled and small businesses are being hit by backdoor tax increases in advance of November's "tax-cutting" Budget, the Liberal Democrats said yesterday.

Malcolm Bruce, the party's Treasury spokesman in the Commons, said the Chancellor already had tax rises of pounds 2.5bn in the pipeline - almost enough to finance the expected two-penny cut in the basic rate of income tax, to 22p in the pound.

One of the devices being used to fill the "black hole' in Kenneth Clarke's Budget arithmetic was value-added tax.

Mr Bruce said that VAT exemption had recently been removed from "a wide range of products designed solely for the use of the disabled, including air-purification products, vacuum cleaners and other allergy-relief goods, which will now be standard rated at 17.5 per cent". VAT zero-rating was also being removed from supplies of incontinence goods to National Health Service or non-charitable nursing home patients.

But the operation extended to a proposal, which quietly took effect last month, to restrict the level of claims for the repayment of wrongly- paid VAT from 23 years - to three years. A spokeswoman for Customs and Excise said yesterday that it was merely trying to "protect" the larger interests of the taxpayer - the Exchequer - from open-ended repayments.

Mr Bruce said there were also pending rises of 5 per cent in road fuel duty, 3 per cent in tobacco duty and in council taxes.