Blair ally wants inheritance tax scrapped
Sunday, 20 August 2006 12:00 AM
Former cabinet minister Stephen Byers has called on the government to abolish the controversial inheritance tax.
Writing in the Sunday Telegraph, Mr Byers, a close ally of prime minister Tony Blair, described the tax as "a penalty on hard work, thrift and enterprise".
The former transport secretary, who resigned in 2002 following a series of scandals at his department, warned that soaring house prices could see millions more people coming within the "net" of inheritance tax, which is levied on all estates worth over £285,000.
According to government figures, the number of people who are now paying inheritance tax has more than doubled since Labour came to power, up from 18,000 in 1997 to 37,000 last year.
Critics have subsequently accused the government of using inheritance tax as a stealth tax, with the Treasury amassing £3.3 billion last year alone.
Mr Byers said that scrapping the tax would allow Mr Blair's successor to demonstrate that the Labour party was still "in touch" with Britain's middle class voters.
"We know that Tony Blair will stand down at some stage before the next election," he said.
"The danger for Labour in electoral terms has always been that when he departs from Downing Street, voters will feel that the pragmatic and modernising approach of New Labour has gone with him."
He added: "The challenge for his successor is to demonstrate that this is not the case and to show that the party is in touch with the British people."
Mr Byers stressed that abolishing inheritance tax would "show that New Labour is prepared to look again at the tax system to ensure that it is grounded in fairness and reflect the modern world in which we live".
The MP for Tyneside North suggested that "green" taxes could be increased to finance such a move.
But rejecting Mr Byers suggestion, the Treasury insisted that inheritance tax was "fair".
A spokesperson for the department told the newspaper: "Inheritance tax is a fair and necessary means of raising revenue for public services, and only affects the top six per cent of all estates.
"Anyone who wants to abolish it needs to explain exactly how they plan to fund the £3.6 billion cost - the equivalent to more than 1p on income tax, or 18p on petrol duty, and almost double what we are spending this year on counter-terrorism and security."
The government has previously said that it intends to raise the inheritance tax threshold to £325,000 by 2010.
Newsletter sign up