Labour will not fight 'fair' Budget tax cuts

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The Independent Online

Political Correspondent

Labour prepared the ground yesterday for a policy of non- opposition to tax cuts in the Budget, as shadow Chancellor Gordon Brown set out terms for "sustainable, fair" reductions.

Contrasting John Major's goal of scrapping Capital Gains Tax with Labour's plan to cut VAT on domestic fuel from 8 to 5 per cent, Mr Brown said the Government promised "the overfeeding of the 5,000" - those few who would share pounds 596 million from the abolition - "when a better priority would be to help lower and middle income Britain, for example, by cutting VAT on fuel to 5 per cent".

Mr Brown would not be drawn on other examples of "fair" tax cuts which he might support, but a Labour source hinted that the party would not oppose a cut in income tax that was tilted in favour of the lower-paid.

"We have got to look at whether tax cuts are sustainable, whether people are better off - in other words, what the Conservatives have given with one hand they have usually taken with another - and whether they are fair. These are the three criteria which we shall use to judge the government's decisions," Mr Brown said.

A party source stressed that the test of sustainability meant an assessment of the economic prospects "over the next five years", rather than a narrow look at public borrowing.