Blair downplays tax rise suggestion
Prime Minister Tony Blair has downplayed suggestions that taxes will inevitably rise if Labour is re-elected.
His remarks came in the wake of an International Monetary Fund forecast signalling imminent tax increases under Labour or spending cuts.
The IMF’s biannual World Economic Outlook predicted the British economy would grow by 2.6 per cent in 2005, down on the 3.5 per cent forecast by Chancellor Gordon Brown in his March budget.
Tax would be the mechanism likely to make up the difference, it said.
The global financial watchdog warned Mr Brown would have to cut borrowing if he wished to meet his own “golden rule” on tax and spending in the course of an economic cycle.
But Mr Blair argued it was unfair to claim tax rises were all but inevitable under Labour.
“You can’t say that on the basis of the spending plans we have”, he told BBC One’s Paxman Interviews.
“The spending proposals that we have are adequately catered for by the tax plans that we have got.”
The Opposition says Labour should not be trusted in light of its decision to raise the basic rate of National Insurance during the previous Parliament despite a pledge not to.
But Mr Blair defended the one per cent rise in National Insurance, saying it was necessary for investment in the NHS.
He added: “What I can say to people is overall our taxes are actually lower than the European average and they are lower to the proportion of our national income than most of the years Margaret Thatcher was in power.”
Asked if there was any question of a local income tax being introduced by Labour, Mr Blair said: “No. We have a review into the council tax and what’s the right way to replace it, so you can’t as it were foreclose options.”
“For me the local income tax has always been a problem. It is all very well for the Lib Dems to say get rid of the council tax and everyone says that’s fantastic.”
“However, if you are a two-earner or three-earner household, you are going to pay a lot more money.”
“We have got a review, so I can’t start closing everything off. But what I can say and personally I think I have said this on many occasions, there are big problems with a local income tax.”
His comments come amid suggestions by the Liberal Democrat that, privately, Labour is interested in their policy of a local income tax.
