Income tax soars for middle classes
Wednesday 09 November 1994
Everyone earning between pounds 15,000 and pounds 50,000 a year will be paying more of their income in direct taxes in 1995-96 than they were seven years ago, according to the figures released at the end of the parliamentary session last week.
People earning less than pounds 15,000 will benefit by pounds 110 a year at most. The main gainers will be people at the top end of the salary range. Those with incomes over pounds 80,000 will gain an average pounds 16,800.
The Labour Party use the figures to launch a new attack today on the Governement's record for restraining tax increases.
The figures help to explain Labour's lead in the opinion polls. The main groups hit by the tax rises include, typically, professional people who float between parties.
The figures were released in a written reply by Sir George Young, Financial Secretary to the Treasury, to Clive Betts, Labour MP for Sheffield Attercliffe. They show that across all income bands there will be an average loss to the Treasury of pounds 130 compared with the tax take in 1987-88.
However the gains to tax-payers are concentrated among the well paid. Those with incomes between pounds 50,000 and pounds 70,000 will find their tax and National Insurance reduced by an average pounds 530 and for those between pounds 70,000 and pounds 80,000, by pounds 3,020.
But people earning between pounds 15,000 and pounds 30,000 will face an increase of between pounds 40 and pounds 180.
Andrew Smith, a Labour Treasury spokesman, said the figures showed the heaviest burden falling on middle income earners. ``These are precisely the people Conservative propaganda before the election said would be hit by Labour's tax plans. That was a lie, but this is reality under the Tories.''
John Townend, chairman of the Conservative backbench finance committee, said the figures reinforced the case for cutting public spending to make room for tax reductions.
Gordon Brown, the Shadow Chancellor, will be emphasising the ``unfairness'' of Conservative taxes at a press conference today, but will not be indicating what tax levels would be under Labour. He will focus on the need to close off ``privileges and abuse''. Particular targets will be inheritance tax, uncollected tax, and privatised utilities.
WHO GAINS AND WHO LOSES Income, 1995-6 (pounds) More or less tax and NI than 1987-8 (pounds) Under 5,000 -50 5,000-10,000 -110 10,000-15,000 -80 15,000-20,000 +40 20,000-25,000 +120 25,000-30,000 +180 30,000-40,000 +710 40,000-50,000 +700 50,000-70,000 -530 70,000-80,000 -3,020 Over 80,000 -16,800 Average -130
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