Labour pledges no increase in income tax rates

The Labour Party has launched its general election manifesto and pledged not to increase the basic or top rate of income tax.

The party has promised to continue to make "targeted tax cuts for families" but there is no mention of national insurance contributions in the 112-page manifesto.

The manifesto said at page 16: "Labour believes tax policy should continue to be governed by the health of the public finances, the requirement for public investment and the needs of families, business and the environment.

"We will not raise the basic or top rates of income tax in the next Parliament. We renew our pledge not to extend VAT to food, children's clothes, books, newspapers and public transport fares.

"We will continue to make targeted tax cuts for families and to support work. As a result of personal tax and benefit measures introduced since 1997, by October 2005 families with children will be on average £1,400 a year better off in real terms. Living standards in Britain have been rising, on average, by 2.5 per cent per year since 1997 ' a total increase of nearly 20 per cent.

"We want a tax regime that supports British business. That is why we have cut corporation tax to its lowest ever level, introduced the best regime of capital gains tax in any industrialised country, and introduced a new Research and Development tax credit."

'Hidden price tag'
Reports said shadow chancellor Oliver Letwin warned that Labour's spending plans had a "hidden price tag". The Conservatives have insisted that taxes will rise if Labour wins the election.

Letwin challenged Labour over what he described as an £11bn "black hole" in its spending plans. "The question is very simple. How are they going to pay for it?" he asked.

"They are planning to spend more and borrow more than we are and they will have to tax more as well."

But Mr Letwin refused to give a commitment that a Conservative government would not raise taxes, according to the BBC News website. "This is a question not of promises but of trust," he said.

"The issue here is whether you trust Mr Blair, who said before the last election he would not raise taxes and then raised them 66 times by stealth, or whether you trust us."

Tory Treasury spokesman George Osborne claimed that if NICs are increased to cover Labour's "black hole", a couple on average earnings will be £1,000 a year worse off.

The Liberal Democrats will launch their manifesto on 14 April.

Andrew Goodall
Editor, TaxZone