UK's Political Parties Battle Over Tax As Election Campaign Gets Underway

by Jason Gorringe, Tax-news.com, London

11 May 2001

With less than a month to go before the UK general election, the campaign has kicked off on issues of tax, with Prime Minister Tony Blair vowing not to raise the top rate of income tax, whilst being simultaneously challenged by economic think tank the Institute for Fiscal Studies (IFS), which claims taxes have gone up by £24bn in the four years of Blair's (or should that be Gordon Brown's) reign.

Tax certainly seems to be a major battleground in this election. No sooner had Mr Blair named June 7 as the date, Tory opposition leader William Hague said he would curb public spending in order to finance tax cuts. Mr Blair on the other hand, seems to be going down the road of massive spending. The IFS said this week that the revenues accumulated by the Chancellor during Labour's first term in office would comfortably cover spending on schools, hospitals and transport until 2003-04, but if Labour kept on spending, tax increases of £5bn a year or higher would be needed. The government, said the IFS, would have to raise taxes by the equivalent of almost 2p on the basic rate of income tax. Director Andrew Dilnot was quoted as saying: 'This is not a deep point, it is a matter of arithmetic.'

It is widely believed that Gordon Brown wanted to increase the top rate of income tax, but was put in his place by Tony Blair, who pledged at the last general election that a Labour government would not to raise the top rate of taxation. Mr Blair told a question and answer session this week: 'I think it is important we keep incentives for people in the taxation system. I know many people who support us strongly might like us to change tax rates at the top, but I believe the best thing we can do is offer real opportunity at the bottom.'

Conservative Shadow Chancellor, Michael Portillo, poured scorn on Labour's taxation plans. He said Gordon Brown had "conspicuously failed" to mention tax cuts as one of his five economic goals for the next Labour government: 'It's not difficult to see why,' he said. 'Labour want to go on spending faster than the economy grows. That would leave Gordon Brown with a black hole in the public finances that would have to be filled with higher taxes.' Gordon Brown was suitably vague. Asked whether he would be increasing taxes, he told the BBC Radio 4 Today programme that there would be a "balanced approach to taxation".

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