Labour dodges question on tax

GORDON Brown was facing a tax row after a Cabinet Minister refused to rule out more rises after the next General Election.

As the Chancellor put the finishing touches to Wednesday's Budget, Labour chairman Ian McCartney dodged questions about the party's plans.

Asked if taxes will go up if Labour wins a third term, he failed to rule out the prospect. 'We don't speculate on the Budget,' he protested.

But in a clear defence of Labour's record, he added: 'Where we have introduced taxes, like the windfall tax, we have reduced youth unemployment to virtually nil and introduced a new deal which has created 1.7m jobs.'

His reluctance to comment was given added significance last night by one of the Chancellor's closest allies, Geoffrey Robinson.

The former Paymaster-General admitted that Labour had ducked awkward questions on tax in the past to get elected.

In an interview with BBC1's Panorama, he said: 'It's very difficult to win an election if you go out there saying, look, if you elect me I promise to absolutely smash you with taxes you've never heard of in your life. You know it isn't like that in the real world.'

Critics pointed out that before the last election Ministers refused to comment on increases in National Insurance - a tax which Brown promptly raised after being returned to office.

The Tories said the Chancellor was being forced to raise taxes to fund massive increases in public spending.

Shadow Chancellor Oliver Letwin said independent experts had already warned of a £10bn 'black hole' in Brown's spending plans.

'I am not surprised that Ian McCartney dodged the question about tax,' he said. 'It is time for Labour to come clean and say whether they will fill this black hole with yet more tax increases if they win a third term.'

The row came as a report claimed that tax rises under Labour have cost every man, woman and child £1,500.

The Tory-leaning think-tank Centre of Policy Studies said the amount raised in taxes soared from £261bn to £348bn during the Government's first six years.

Ruth Lea, the report's author, said the tax burden had risen inexorably. 'There is little doubt the Chancellor is a strong advocate of tax and spend policies,' she said. 'He seems to believe that taxing people of their rightly earned income is fair.'

With public anger over tax rising, Brown is expected to signal a slowdown in public spending this week. While hospitals and schools are likely to be shielded, departments are braced for cutbacks.

The Home Office last night played down rumours of a bust-up between Home Secretary David Blunkett and Brown over funding for police and the war on crime. Defence Secretary Geoff Hoon has written to Tony Blair to complain about cuts in his spending.

The Government is due to announce plans today for a minimum wage for 16 and 17-year- olds in a move which will delight campaigners and trade unions.

Insiders believe the rate will be around £3 an hour. Increases in the statutory rate - which has applied only to workers over 18 since it was brought in five years ago - are also expected to be unveiled.

The rate for 18 to 21-year-olds is currently £3.80 an hour, rising to £4.50 for adults aged 22 or over.

Stamp duty

ACCOUNTANTS predicted stamp duty on properties worth more than £500,000 may rise from 4% to 5%.

Bob Rothenberg, senior partner at tax specialist Blick Rothenberg, said a new rate of 6% or higher for homes worth more than £1m was possible.

Increasing duty would enable the Chancellor to boost revenue, 'while claiming he was acting to cool the housing market'.

Raising VAT

ANOTHER option could be to raise VAT by 1% to 18.5%.

Stephen Herring, tax partner at BDO Stoy Hayward, believes that Brown would not touch National Insurance until after the next General Election, while increasing income tax would be 'too unpopular'.

However, Anne Redston, tax partner at Ernst & Young, felt there was a 50/50 chance VAT would go up by