PARLIAMENT: Ministers rally to defend Labour's record on taxes

TREASURY

THE BITTER row over the tax burden took a fresh turn yesterday with ministers claiming that the Government had kept every single one of its pre-election promises. Andrew Smith, the Chief Secretary to the Treasury, insisted during question time that the Government had delivered its pledges not to raise the basic or higher rate of income tax until the next general election.

Mr Smith said the figures showed the tax burden as a proportion of gross domestic product would be 37 per cent this year and 36.8 per cent next year - evidence it was falling under Labour. "We are keeping each and every promise which we made on tax at the election. We promised not to raise the basic or top rates of income tax throughout the next Parliament, and we haven't," he said.

He said Labour had lowered the starting rate of income tax to 10p, as promised in the manifesto, and had also not put VAT on children's clothing and newspapers and had cut the VAT rate on fuel to 5 per cent.

The fresh clashes over the tax burden came after Tony Blair admitted earlier this week that it had risen during the first two years of Labour in office but had fallen this year. But Francis Maude, the shadow Chancellor, said figures showed the tax burden was 35.6 per cent of the GDP when Labour came into power and had risen since then despite assurances by the Prime Minister before the last general election that they would not. "The Prime Minister before the election said this: `We've no plans increase taxes at all'.

"Was that a promise? What do you understand to have been meant by that? The fact is you got elected by promising not to increase taxes at all.

"Once elected, almost the first thing you did was to raise taxes massively by stealth, and then - in every quarter since the election - the tax burden has increased."

Mr Maude added that figures showed that taxes would increase by pounds 40.7bn until the next general election, the equivalent of pounds 1,500 for every taxpayer.

But Mr Smith insisted the average household was pounds 380 a year better off as a result of Labour's tax changes while families with children were pounds 740 a year better off.

Earlier, David Heathcoat-Amory, the Shadow Chief Secretary, challenged the Paymaster-General, Dawn Primarolo, to explain why the Working Families Tax Credit was "shown as a tax cut in the national account even though all the national and international accounting conventions and the Office of National Statistics all insist that it should be shown not as a tax cut but as an item of public expenditure".

Ms Primarolo replied that the calculation for the tax credit followed "the same procedure as, for instance, Mortgage Interest Relief did under your government".

Later, Tories attacked Margaret Beckett, the Commons Leader, when she denied that Labour had promised not to raise the tax burden. "Before the election they made endless references to the fact that as an Opposition we were refusing to commit ourselves to anything other than not raising the rate of income tax," she said. "It's no good them now trying to convince the British people that in some way they were unaware of the basis of the facts the Government was making."