Conservative and Labour finance policy chiefs have ruled out VAT hikes if either party wins the General Election on Thursday July 4.

Conservative Chancellor Jeremy Hunt has warned rises to taxes on products and services could “hammer families’ finances”, as his party unveils its first election poster.

But Labour’s shadow chancellor Rachel Reeves has denied her party has plans to raise tax, national insurance or VAT.

Writing in The Telegraph, Mr Hunt said: “I can commit today that, not only will a future Conservative government not increase any rate of income tax or national insurance, but we won’t increase the main rate of VAT for the duration of the next Parliament.”

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He urged Labour leader Sir Keir Starmer to make a similar commitment “on camera”.

Mr Hunt also wrote: “A VAT increase will hammer families’ finances and push inflation back up, just when we have got it down to normal.”

UK inflation slowed to 2.3% in April, the lowest level since July 2021 and near the Government’s 2% target, according to the latest figures.

The Conservative Party’s new poster bears a giant red piggy bank bearing the words: “If you think Labour will win, start saving…”

It claims Labour’s fiscal plans would cost working families £2,094.

But Ms Reeves said Mr Hunt’s words were “absolute nonsense”.

Her party claims the Conservatives have a spending black hole in their plans worth £71 billion, where the Tories have allegedly failed to say where the money will come from.

UK inflation rate
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Tory pledges would, according to Labour analysis, result in borrowing to plug the gap, which could in turn raise interest rates, resulting in a monthly mortgage payment increase of £350.

Ms Reeves said: “Labour will not be increasing income tax, national insurance or VAT.”

“I want taxes on working people to be lower, not higher. That is why we opposed the increases to national insurance when Rishi Sunak put those forward as chancellor.”

During speeches this week, Ms Reeves has said her party has no plans to announce new tax rises beyond already announced policies, including a plan to charge 20% VAT on private school fees.

Mr Hunt has since claimed credit for the commitment, claiming that Labour had “buckled under pressure” to rule out VAT rises.

Both parties are making their General Election pledges against a challenging backdrop. The Institute for Fiscal Studies (IFS) said the next UK government will face the toughest fiscal inheritance in 70 years.