Taxi for Labour! Ministers are ‘operating out of highway’ and plotting to slap VAT on cab fares, Tories warn

Ministers are ‘running out of road’ and plotting a taxi tax grab, the Tories have warned.

Labour has refused to rule out slapping VAT on private hire fares, sparking speculation the Chancellor will clobber cabbies at the Budget.

The Tories warned such a move would hit people in rural areas and those with disabilities hardest, also harming the night-time economy.

Industry experts expect such a tax to raise £750million a year – by adding £2 to £3 to the cost of a typical £12 journey.

Shadow transport secretary Richard Holden asked the Treasury what assessment had been made of applying 20 per cent VAT to private hire vehicle journeys on vulnerable users.

Treasury Minister Dan Tomlinson replied: ‘The Government continues to take this complex issue very seriously and recognises businesses’ need for certainty. 

Ministers are ‘running out of road’ and plotting a taxi tax grab, the Tories have warned (Stock Photo)

Labour has refused to rule out slapping VAT on private hire fares, sparking speculation the Chancellor, pictured on Budget Day 2024, will clobber cabbies at the Budget

‘The Government is carefully considering the wide range of views shared through last year’s consultation on the VAT treatment of private hire vehicles and will publish a detailed response soon.’

Mr Holden said the Government was refusing to rule it out ‘because they’re planning it’.

At present most taxi operators need not charge VAT as their drivers are self-employed and earn less than £90,000.