Byers defends inheritance tax plans

Friday, 1 September 2006 12:00 AM

Stephen Byers has today repeated his call for inheritance tax to be scrapped, insisting it does nothing to address inequalities in society and is hurting ordinary people.

The former transport minister and Blair loyalist said he stood by his proposal, despite fierce criticism from Gordon Brown and a brush-off from Downing Street.

"The original architects of inheritance tax never intended it to apply to the people who are now falling within its net. We are seeing people who were never higher-rate tax payers ending up paying tax at 40 per cent on their death," he wrote in the Guardian.

He attacked his left-wing critics for clinging to the tax "like some sort of comfort blanket" which "allows them to rest easy in the belief that something is being done about addressing the inequalities in our society".

"The reality is that this particular tax does nothing of the sort," Mr Byers argued, insisting that rising house prices meant more people's homes were falling into the inheritance tax bracket, forcing their relatives to pay heavy duties when they died.

"The sooner we realise that, the better, because it will then allow us to have the difficult, and no doubt provocative, debate about how we can use tax not only to raise money to invest in public services but also to achieve our wider social, environmental and political objectives."

Writing in the Financial Times on Tuesday, Mr Brown made a thinly-veiled attack on his former colleague's proposals - which would cost the Treasury more than £3 billion in a year in lost revenue - by warning that there must be no "unfunded tax cuts".

"No political party will be trusted if it promises stability in one breath and unfunded tax cuts in the next," he wrote.

"To make unfunded promises, to play fast and loose with stability (indeed to play politics with stability) is a return to the bad old days - something I will never do and the British people will not accept."

This message was backed up by Mr Brown's closest ally, economic secretary to the Treasury Ed Balls MP, later that day.

"We have seen in the last few weeks, both in Stephen Byers, and also from the Tories, proposals for large, unfunded and uncosted tax proposals on inheritance tax or on stamp duty in financial services," he told Today.

"It seems to me you cannot have a serious debate unless you say how you are going to pay for these measures."

Downing Street also dismissed the proposals, with Tony Blair's spokesman telling reporters that inheritance tax was a "fair and necessary means of raising revenue for public services, and affected only the top six per cent of all estates".

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