Spending will drive up tax, says Portillo

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The Independent Online

Government plans to inject £68bn into public spending will drive up interest rates and tax levels over the next parliament, Michael Portillo, the shadow Chancellor, said yesterday.

Government plans to inject £68bn into public spending will drive up interest rates and tax levels over the next parliament, Michael Portillo, the shadow Chancellor, said yesterday.

Government spending could not be turned on and off "like a tap" without disturbing economic growth.

Mr Portillo said Treasury plans showed public sector spending outstripping the sustainable rate of growth in the economy. "That can only be achieved by imposing interest rates higher than they are now or higher rates of taxation. The implication will be higher taxes year after year throughout the next parliament."

He warned that as public spending accelerated, it would attract workers and other resources away from the private sector, which would be "crowded out of the economy".

In a speech to the Confederation of British Industry's conference, he said the British electorate was over-taxed.

"The Chancellor should be planning a programme of tax reductions to give money back to the over-taxed and make the UK economy more competitive," he said. "By slapping many of his taxes on to marriages, mortgages, pensioners and motorists, he has hit the people he said he would help."

A freeze on fuel duty, which Gordon Brown, the Chancellor, is expected to announce today, would not be enough. He said the Tories were committed to cutting duty to petrol and diesel. "I am not surprised we have seen a taxpayers' revolt," he said.

Independent figures from accountants PricewaterhouseCoopers showed the total tax burden had risen by £30bn over the three years since Labour was elected, said the shadow Chancellor.

Mr Portillo said: "This is not the government you voted for. It was elected on the basis that it would not increase burdens on business. For a while it pretended that it hadn't. Now it's given up on that and vilifies those who urge that we should cut taxes as our competitors are doing."

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