Tax take up by £1bn a week

Saturday, 12 May 2001

By Ian Cowie, Andy McSmith, and Benedict Brogan

BRITONS will pay £1 billion a week more tax this year than they did before Labour came to power in 1997, according to the Inland Revenue.

Official figures, drawn up to take account of Gordon Brown's last Budget, show that taxmen expect to collect more than £156 billion this year, compared to less than £104 billion in 1997. That is an increase of more than £52 billion, or 50 per cent.

The raw data provides the most dramatic illustration yet of how Mr Brown has engineered a sharp increase in the state's share of the nation's wealth without increasing the rates of income tax.

The figures emerged as tax continued to dominate the election campaign, threatening to open a rift in Labour's high commmand over tactics. Tony Blair is anxious not to lose the support of middle income Labour voters, and implicitly confirmed yesterday that Labour's election manifesto, out next week, will include a commitment not to increase the basic or high rate of income tax during another Parliament.

He also tried to reassure higher earners by saying that Labour recognised the need to reward endeavour. But Mr Brown fears that flagging up a promise to freeze income tax will only expose him to questions about what would happen to indirect taxes during a second Labour term.

While he was repeating his promises of fiscal responsibility yesterday, Mr Blair and Alan Milburn, the Health Secretary, spent the day campaigning on a promise that the NHS would improve radically under Labour, and emphasising that better health care came at a price.

William Hague sought to exploit Labour's dilemma by demanding a guarantee that there would be no more "stealth taxes" of any kind. On a campaign trip to Scotland, the Tory leader said: "We are told Tony Blair will promise not to increase income tax. This is exactly what he said at the last election and he went on to break his promise by scrapping the married couple's allowance and mortgage relief.

"So I challenge him to say that he will not increase taxes at all, and if he is not prepared to say that then everyone will know he'll introduce yet more stealth taxes. If Tony Blair thinks he will get away with saying he won't increase income tax then he's making a great mistake."

Mr Hague and Michael Portillo, the shadow chancellor, plan to return to the attack today by claiming that Mr Brown would need to add another 52p to the price of a litre of petrol to cover what the Tories call the "black hole" in his spending plans.

Labour retaliated by quoting Mr Hague's own words to demonstrate that he was not prepared to make the kind of tax guarantee which he has demanded from Mr Brown. Interviewed about Tory tax policy by the Financial Times, Mr Hague said: "I can't set out the detail of every Budget so I'm not going to say no tax will ever rise."

Faced with similar questions, Mr Brown stuck doggedly to his line that, come what may, a Labour government would observe two fiscal rules. Current expenditure would be met through taxation, not borrowing, and the ratio between government debt and output would be maintained.

He refused to say how he would cope with a situation in which tax revenues were not enough to pay for spending plans, although the Health Secretary, sitting alongside Mr Brown at Labour's morning press conference, was very specific about targets for the NHS.

Mr Milburn promised: "By 2005 patients will wait no more than six months. Those with the greatest clinical priority will be treated faster still. By 2005 there will be 20,000 more nurses, 10,000 more doctors. There will be thousands more beds. By 2005, patients in every part of the NHS will be able to book their appointment at a time of their convenience."

Mr Blair emphasised that he expects his Chancellor to come up with the money. Speaking to staff at the Queen Elizabeth II hospital in Greenwich, he said: "There is still an awful lot more investment that needs to get into the NHS. We need to keep this going to make sure we complete the process of change. Everybody wants the NHS to be what it could be. If we have the courage and foresight to keep putting money in, we'll make the NHS what it could be. It is only going to happen if we carry on making this investment."

Inland Revenue figures show that Mr Brown will take £35 billion more in income tax this year than in 1997 despite cutting the basic rate by 1p and introducing a 10p starting rate. This has been achieved by measures such as reducing tax breaks on pension funds and personal equity plans, abolishing mortgage tax relief and the married couple's allowance, and failing to raise thresholds fully in line with inflation.

Four increases in Stamp Duty have more than trebled net receipts from this tax on homebuyers to £8 billion.

Mr Brown's "simplification" of capital gains tax and his introduction of complex tapers for business and personal assets almost doubled the take in those areas to £2.5 billion.

Inheritance tax now yields the Treasury £2.3 billion, or almost 50 per cent more than it did in 1997.

The true cost of a Socialistic/Liberalistic Society: Britons paying $1.5 billion more in taxes PER WEEK since liberal takeover in '97!

-- Ain't Gonna Happen (Not Here Not@ever.com), May 15, 2001

Answers

The raw data provides the most dramatic illustration yet of how Mr Brown has engineered a sharp increase in the state's share of the nation's wealth without increasing the rates of income tax.

Kind of reminds me of when the U.S. imposed or increased "user fees" on national parks to try to balance the budget.

-- You get what (you@pay.for), May 15, 2001.