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Ministers considered proposals to increase VAT above 18.5%, Gordon Brown admitted today.
Under pressure from David Cameron, the Tory leader, at prime minister's question time, Brown said ministers "looked at all options" but rejected a proposal to increase VAT.
The row erupted after the Treasury was last night forced to deny that Alistair Darling was drawing up secret plans to raise VAT to 18.5% in the next parliament when a draft document setting out the proposal was mistakenly published on the internet.
In the Commons, Cameron asked the prime minister whether there had been a plan to the increase VAT above 18.5% - suggesting he would use freedom of information legislation to ascertain the information if necessary.
Brown replied: "We looked at all options; we rejected the option of increasing VAT… we decided we would lower it and I hope he will support that."
Cameron retorted: "It is absolutely clear, they are planning a VAT bombshell to hit every member of the country."
Brown hit back, accusing the Tories of being the "do nothing party".
Cameron said: "The country is going bankrupt, the government's been found out and new Labour is dead…. There is a black hole at the heart of public finances."
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