Hidden tax traps for northern families and pensioners in Budget - Beith

2.31.48pm GMT Wed 21st Mar 2007

Commenting on today's budget speech - possibly the last by Gordon Brown - Berwick MP Alan Beith said

"This budget is full of hidden bad news for many northern families and pensioners. Income tax on low earnings has been doubled from next year; the discredited Council Tax is to stay.

"Schools in Northumberland are still not guaranteed funds for either rebuilding or for pupils, which other areas will get.

"Next to nothing has been done to switch to green taxes."

The reduction in the basic rate of income tax from 22p to 20p in the £ is largely funded by doubling the present 10p rate on the first £2230 of taxable income.

Liberal Democrat Leader Menzies Campbell said:

"The big increase in taxation is a doubling of the starting rate of income tax rate. The income tax changes announced in the budget will mean that anyone earning less than around £15,000 will pay more in income tax.

"The 2p cut in the basic rate is welcome, but let us be clear this is an income tax cut for the wealthy dressed up as a tax cut for the poor.

"While the Chancellor has taken some of the key headline policies from the Liberal Democrats, he has got the fundamental point wrong, we need tax cuts for the low and middle income earners now.

"Those on low incomes will now experience even higher rates of taxation and this will do nothing to increase incentives to work."

In his speech to Parliament Menzies Campbell accused Gordon Brown of not doing enough for the hard working families, young professionals, nurses or police officers struggling with rising living costs.

Menzies Campbell said:

"The Chancellor had the chance to use this final budget to show that he was listening to the voices of the people of Britain. But he has delivered a budget of missed opportunities.

"He had the chance to build a fairer Britain through tax cuts for the low paid - but in fact he has increased income tax for the lowest paid.

"He had the chance to create a greener Britain by taxing pollution - but he shunned it.

"And he had the chance to shape a prudent Britain by saving billions of pounds on government waste - but he avoided it.

"Instead he has spurned all of these opportunities. He has concentrated on his own political succession."

Talking about growing inequality Menzies Campbell said:

"The sad fact is that in Britain the wealth gap between rich and poor is higher than it was under Margaret Thatcher. By introducing loopholes in the capital gains tax regime the Chancellor has allowed the wealthiest individuals to minimise their tax bills. In doing so, he has proved to be every bit as susceptible as his Conservative predecessors to giving tax-breaks to our richest citizens at the expense of the low paid. Meanwhile, the lowest earning fifth of UK households still pay a greater proportion of their income in tax than the highest earning fifth.

"This budget was an opportunity to rebalance the tax system in favour of the less wealthy, but the Chancellor refused to take it."

Addressing the issue of green taxation, Menzies Campbell said:

"His proposals on Vehicle Excise Duty fall far short of what is required. As his last budget this should have been a real green budget, with a vision and a commitment to taking the steps needed to tackle climate change.

"It should have been a tax-cutting budget too. It should have cut the tax burden on the low and middle income families that need it most. That's what you should do with the proceeds of green taxation.

"This is the true moral case for tax cuts. And it is a matter of regret that the Chancellor has not chosen to do so."

Speaking of need to strip out Government waste Menzies Campbell said:

"Despite the Chancellor's reputation for prudence, this government has wasted large sums of public money on unnecessary and unpopular measures. Now it is planning to waste more.

"Three examples stand out.

"First, the war in Iraq has cost over £5 billion so far - quite apart from the human cost.

"Second, identity cards will cost at least £6 billion - and perhaps as much as £18 billion.

"Third, we are already committed to £74 billion for the decommissioning of the existing generation of nuclear power stations. Building a new series of nuclear power stations will simply add to that bill.

"The Government should not be wasting tax payers' money in this way."

Liberal Democrat Shadow Health Secretary, Norman Lamb MP responded to Gordon Brown's confirmation today in the budget that £8 billion will be put into the NHS this year, saying:

"Despite enormous investment, productivity in the health service has gone down, while deficits are affecting an increasing number of NHS organisations.

"This has led to services being cut and medical professionals losing their jobs. If the NHS is mired in deficit with high investment, what will happen when the money stops coming in from 2008?"

Commenting on welfare announcements contained in today's Budget, Liberal Democrat Shadow Work and Pensions Secretary, David Laws MP said:

"Seven years ago Gordon Brown claimed that eradicating child poverty was this generation's duty to the next. Yet even after today's announcements he remains on course to miss his 2010 child poverty target by over 1 million children.

"Brown's increased investment in the tax credit system has fallen hopelessly short of the £4.2 billion the Joseph Rowntree Foundation calculated the Chancellor would need to meet the 2010 target.

"By increasing the rate at which tax credits are withdrawn while at the same time abolishing the starting rate of income tax, low income families will face even higher effective tax rates.

"The Chancellor must accept that throwing ever more money at the failed tax credits system, is not the way to eradicate child poverty."