Wednesday 24 May 2017

Darling warns rich must pay 'fair share' in budget

Andrew Porter in London

ALISTAIR Darling used Labour's last budget before the election to carry out a £19bn (€21bn) tax raid on the middle classes to help pay Britain's record debt.

Just weeks before the country is due to go to the polls, the British Chancellor of the Exchequer warned the well off that they must pay their "fair share".

Such is the scale of public debt, which Mr Darling forecast would rise to £1.4 trillion in (€1.56 trillion) the next five years, he was unable to announce substantial tax breaks or giveaways.

Instead, he revealed a series of measures that would raise money. These included:



  • A 5pc stamp duty levy on homes valued at more than £1m (€1.12m), which would help fund a stamp duty cut for first-time buyers.
  • The freezing of inheritance tax thresholds, personal tax allowances and a reduction in tax breaks for people earning more than £100,000 (€112,000).
  • A 1p rise in fuel duty, with two further rises totalling nearly 2p within the next year.
  • Above-inflation rises in alcohol taxes, with cider duty rising by 10pc above inflation and wine, beer and spirit duties to rise by 2pc, and further increases to come.
  • Tobacco duty to be increased by 1pc by the end of the month and by 2pc in real terms each year until 2014. It means cigarettes will go up by 15p a pack.


There were only modest handouts for pensioners and parents with young children.

Mr Darling set out Labour's strategy for an election campaign, focusing on persuading voters that Gordon Brown had taken Britain through the worst of the recession. But the Conservatives branded it an "empty budget", with key decisions delayed until after polling day.

"The chancellor spent half an hour talking about helping business, but the fact is he is raising £19bn (€21bn) of extra taxes," said David Cameron, the Tory leader.

"They want to tax your car, your phone, your business, your jobs. These are the ticking tax bombshells timed to go off the day after the election that will destroy our recovery.

"Instead of more waste, more spending, more taxes, what this budget needed to do was ease the burden on our families and businesses and let enterprise flourish."

Criticised

Over the next four years, the chancellor said, the British government would find £57bn (€64bn) to help reduce the deficit. The rest would come from cuts and savings in public spending but the Tories criticised Mr Darling for failing to explain where the cuts would fall and demanded more detailed proposals be published before an election.

Whitehall's plans to find £11bn (€12bn) of savings, which were published shortly after Mr Darling had finished speaking, were judged by experts to be insufficient.

Critics also pointed out that government spending would, actually rise by more than 2pc in real terms over the next year.

Mr Darling told MPs he was standing by his forecast that the economy would grow by 1pc to 1.5pc this year. However, he slightly downgraded his prediction for next year to 3pc to 3.5pc compared with the 3.5pc he had previously predicted.

Even so, his forecasts were judged to be over-optimistic by most independent experts, with foreign investors quick to start selling government bonds.

Mr Darling's strategy of targeting the rich prompted criticism that Labour was seeking a return to the politics of class warfare but the chancellor said the decisions were taken for sound economic reasons.

"We have not raised these taxes out of dogma or ideology. We are determined to ensure our overall tax regime remains competitive," he said.

"But I believe those who have benefited the most from the strong growth in incomes in past years should now pay their fair share of tax."

He said the wealthiest 5pc would pay 60pc of new taxes. The Conservatives said they would not reverse the tax increases for the well-off if they formed the next government. (© Daily Telegraph, London)

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