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10Oct07
THE PRE-BUDGET REPORT – YET ANOTHER TAX CON
Yesterday, Chancellor of the Exchequer, Alistair Darling, delivered the Government’s 2007 Pre-Budget Report and Comprehensive Spending Review. This was a Pre-Budget Report of spin, theft and hidden tax rises.
The Chancellor tried to steal Conservative policies, but the small print shows that his inheritance tax proposal is a con, that he has made no commitment on stamp duty, and that small businesses have been clobbered again. Gordon won't talk straight about the election, won't own up on inheritance tax and won't keep his promises on an EU referendum.
• Taxes will rise by £2.2 billion over the next three years. When added to Labour’s other stealth taxes, the Institute for Fiscal Studies has today calculated that taxes will rise by £2,600 (or £50 a week) for the average family over the next five years. The Government’s borrowing forecast has risen by £16 billion over the next five years.
Gordon Brown's Government
has no new ideas:
• Action on inheritance
tax: Conservative policy
• Action on non-domiciles:
Conservative policy
• Reforming Air Passenger Duty to a flight tax: Conservative policy
• Government will share the proceeds of growth: Conservative policy
• Inheritance tax – another con. Alistair Darling announced that the inheritance tax (IHT) threshold for married couples and those in civil partnerships will rise to £600,000 immediately and to £700,000 by 2010. He presented these changes as a new boost for families. In fact, any married couple can already make use of both their £300,000 allowances. When the first spouse dies they can leave £300,000 to their children free of tax and the rest to the surviving spouse. When the second spouse dies they can again leave £300,000 to their children free of tax. 500,000 people already use this to transfer £600,000 free of IHT. The Government has already said that the IHT threshold will rise to £350,000 in 2010, so even before today’s changes couples would still have been able to transfer £700,000 free of IHT in 2010.
• No commitment on stamp duty. The Government has not backed Conservative policy to abolish stamp duty for nine in ten first-time buyers. Conservatives have committed themselves to helping first time buyers by raising the threshold for them to £250,000.
• Small businesses clobbered again. Alistair Darling announced a new Capital Gains Tax rate of 18 per cent, and the abolition of taper relief and indexation. There have now been four Labour tax rises for small business in just three years, and the tax rate for small businesses has been changed ten times in the past ten years. This tax rise will generate £2 billion in extra taxes, and will clobber small businesses and investors in new companies. The new 18 per cent Capital Gains Tax rate is higher than France’s (16 per cent), Italy’s (12.5 per cent) and the US’s (15 per cent). This tax rise comes on top of the 2007 Budget announcement that the small business tax rate would increase by 3p, raising the tax burden on small businesses by £1.2 billion over the next two years.
Conservative position
Conservatives will match the Government's overall spending total, and we will match Labour spending on health and education.
But Conservatives will go much further by raising the threshold for inheritance tax to £1 million, so that only millionaires pay inheritance tax. For 98 per cent of families, this will take the family home out of inheritance tax altogether.
Conservatives will abolish stamp duty for nine in ten first-time buyers. Conservatives have committed themselves to helping first-time buyers by raising the threshold for first time buyers to £250,000.