PM slams income tax suggestions

Friday, 20 June 2003 12:00 AM

Tony Blair has disavowed comments today from Peter Hain suggesting that the Government could consider raising a higher tax level for higher earners so as to reduce taxes paid by middle and lower income earners.

Mr Hain called for a debate on the possibility or a new higher income tax rate to help to pay for better public services; in comments about a speech he is to make this evening, and has been commended by trade union figures for raising the issue.

The present top rate of income tax is 40%, a lower rate than many countries; however, this rate is paid at a lower income in the UK than most country's top rate, meaning that people on relatively low incomes have to pay the upper rate of income tax.

However, Tony Blair, who is in Greece today to take part in the European Summit, has slammed the idea that his government would raise income tax in this way.

The Prime Minister stated that he had spent the past ten years moving the Labour Party away from that sort of policy and that he has no intention of seeing it return to high income taxes for high incomes.

He further spoke to reassure wealthy voters and the middle class voters he is credited with convincing to vote Labour, saying that tax policy is set in the budget and not by any other method.

Addressing reporters at the summit today, the PM maintained: "Tax policy is not going to change. We're not going to be raising the top rate of tax".

Tackling requests for a clarification of whether top level tax rates would remain unchanged for as long as he remains Prime Minister or simply until the next general election, Mr Blair responded: "I'm not writing our next manifesto now".

But he added: "I haven't spent the last ten years ensuring the Labour Party's in a position where we say we're not raising top rates of tax in order to change that position now".

"And I think it's very important to realise that if you look at the actual tax burden in Britain today, it is lower than many of the years when Mrs Thatcher was Prime Minister".

The Treasury also joined the criticism of the proposal, making it clear that there is no intention to go back on a pledge not to raise income tax at the last general election.

However, amid increasing concerns that the Treasury is not bringing in money fast enough to pay for the Government's spending plans, it is reported that some people within the cabinet would welcome the chance to please the left wing of the party and restore balance to the budget in one move.

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