Hague claims taxes will rise

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The Independent Online
TONY BLAIR was accused of telling repeated "lies" last night after he clashed bitterly with William Hague over whether the overall tax burden would rise because of this week's Budget.

Downing Street appeared to contradict Mr Blair by conceding that taxes would increase over the lifetime of this Parliament, but insisted the rise would be less than under the spending plans Labour inherited from the Tories.

Mr Blair won a boost when the respected Institute for Fiscal Studies (IFS) revised its initial Budget analysis and said that, overall, all income groups would gain from it.

In the Commons, Mr Hague claimed the total tax increase in the next financial year would be pounds 7.1bn, after decisions in previous Budgets were taken into account. The Tory leader told Mr Blair: "You don't want to admit it because when Labour said 'no tax increases at all' at the election, they lied to the people of Britain." Mr Blair, basing his figures on this week's Budget only, said: "There isn't a tax increase. The tax is falling by pounds 4.5bn net ... Twenty million families in total better off."

But later Mr Blair's official spokesman conceded the Budget documents showed the share of national wealth taken by tax would rise from 36.6 per cent to 37 per cent during this Parliament. The Treasury explained that this was due to people entering the top rate tax bracket as their incomes rose, rather than the imposition of higher taxes.

Tory claims that Mr Brown had soaked the middle classes were blunted by the IFS study, which concluded that those in the bottom fifth of the earnings league would gain proportionately the most from the Budget, with an extra pounds 2.28 per week for the poorest 10 per cent and pounds 3.65 for the next tenth.

The richest 10 per cent would gain relatively little but would still be 73 pence a week better off on average.

Budget aftermath, pages 6-7

Business, page 19 David Aaronovitch,

Review, page 3