Labour's revenge on Britain's hard workers
ALISTAIR Darling yesterday unleashed a savage new tax onslaught against Middle Britain in a Budget that signalled the start of a brutal “class war” election campaign.
In a move based on spite and envy, the Chancellor made a shameless appeal to Labour’s core vote by launching a £2.5billion spending spree funded by more punishing tax rises for high and middle income earners.
Along with a freeze on inheritance tax thresholds, he slapped a punitive new five per cent stamp duty rate on properties worth £1million or more.
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He boasted the move would pay for removing the stamp duty on properties up to £250,000 for first-time buyers. But the Treasury’s fine print reveals the two-year ‘holiday’ will cost £550million, while the higher levy on more expensive homes will only raise £390million.
And millions of hard-working middle-class families were hammered by the freezing of income tax thresholds.
By keeping personal allowances at £6,475 next year, the Treasury will suck £2.2billion from workers’ wallets in 2010-11, and £2.8billion in 2011-12. Personal allowances for those earning £100,000 a year will gradually be removed.
Tax relief on pensions will also be restricted from next year but only for those on salaries over £130,000 a year.
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In another blow, Mr Darling reversed plans to raise the inheritance tax threshold, keeping it at £325,000 for the next four years. As a result, a further 650,000 estates will be dragged into the hated death tax.
Last night, Mr Darling’s third and almost certainly last Budget was being widely viewed as a naked statement of class envy.
Business leaders warned that his punitive tax hikes on top earners threatened to devastate wealth creation in Britain. The Chancellor was also accused of not properly explained how he will reduce borrowing.
Mark Bolsom, head of UK trading at Travelex, said: “Frustratingly, he provided lots of broad headlines but a lack of nitty-gritty detail.
“This was more of a lame-duck Budget than a shining beacon of new Labour economic policy.”
Richard Lambert, director general of the CBI, said: “Anxiety remains on how the deficit is going to be paid down, and the growth forecasts for 2011 and beyond are still on the optimistic side.”
Miles Templeman, of the Institute of Directors, said: “There is still no sign of a credible deficit reduction plan.”
In a scintillating response, Tory leader David Cameron said: “Labour have made a complete mess of the British economy and they have done nothing to clear it up. They have doubled the national debt and on these figures they are going to double it again.”
And he warned: “The biggest risk to the recovery is five more years of this Prime Minister.”
But Mr Darling insisted his tax onslaught was “fair”. He said: “We have not raised these taxes out of dogma or ideology. We are determined to ensure our overall tax regime remains competitive. 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.”
The swingeing tax rises will come on top of £19billion of extra tax already planned over the next four years in a bid to slash massive borrowing.
And last night, the Government was under pressure to reveal details of public spending cuts worth up to £27billion over the course of the next Parliament.
