Labour Set To Pledge Income Tax Freeze

by Robert Lee, Tax-News.com, London

25 August 2004

British Prime Minister Tony Blair is poised to announce that income tax rates will be maintained at current levels should the Labour Party win the next general election.

The news emerged as details were revealed of a behind-closed-doors meeting of the Labour Party’s national policy forum held last month to discuss the outline of the party’s election manifesto, where demands for a 50% higher rate of tax by left wingers were reportedly rejected.

According to the Independent newspaper, the meeting voted for a statement which reads: "We will continue to build on our efforts to ensure the tax and tax credit system remains progressive and in line with our principles of ensuring fairness, opportunity and security for all, while at the same time raising sufficient revenue to pay for investment in public services."

An income tax freeze means that the basic rate of 22% and the higher rate of 40% will continue, although further hikes in the National Insurance levy do not appear to have been ruled out. The NI contributions rate was increased last year by 1%.

The Labour Party’s pledge to keep income tax on hold is however, unlikely to assuage critics of Chancellor Gordon Brown’s fiscal policies who have repeatedly warned that tax will have to rise in order to plug a £13 billion ‘black hole’ in the government’s finances.

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