Tories face further onslaught over taxes: Labour says voters face 'five more years of pain'. Donald Macintyre reports

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The Independent Online
A RATTLED Conservative Party will today face a fourth day of tax onslaught from Labour in the wake of a warning by Gordon Brown, the shadow Chancellor, of 'five more years of pain' from increased government taxation.

Michael Portillo, Chief Secretary to the Treasury, will seek to retaliate with a counter-attack on the Opposition when the row moves to the Commons in the Second Reading of the Finance Bill. The issue looks increasingly likely to dominate the local and European elections to the Tories' disadvantage.

Mr Brown kept up the pressure yesterday by arguing that John Major had 'misled the British people and Parliament' by suggesting that the Government would introduce income tax cuts 'year by year'.

Mr Brown argued that the reason for the higher taxes was not because they were paying for better public services but because of high unemployment - costing pounds 9,000 a year for each unemployed person - and low growth - estimated at 1.6 per cent a year for the 1990s.

His renewed attack came as the shadow Chief Secretary, Harriet Harman, produced new calculations showing that, if cuts in allowances are taken into account, a typical family with a pounds 30,000 mortgage would be paying proportionally more in income tax than in 1979.

Mr Brown used projections in the Treasury Red Book to argue that present projections led to a tax share of the Gross Domestic Product in 1998-9 of 38.5 per cent - higher than in any year of Labour government.

Although there appeared little chance last night of a significant Tory revolt on VAT on fuel today, there were growing signs of restiveness on the Tory backbenches about the Government's failure to deflect the attack on tax over the last three days.

One senior backbench government supporter said last night that it would be incumbent on Treasury ministers to broaden their defence to cover wider issues of economic policy in which the Tories were less vulnerable. One MP claimed that ministers had been 'too laid back' in tackling the charges that they had misled electors in 1992.

Whitehall officials argue that the Red Book projections - which show proportional total non-North Sea taxes rising to 35.5 per cent next year compared with 34.75 per cent in the last year under Labour, and then up to 38.5 per cent in 1998-9 - do not take account of possible tax cuts or higher-than-forecast growth before the next election.

But Mr Brown declared voters would never again trust the Tories on tax. He said they had 'lied' on income tax, VAT on fuel and national insurance contributions.

Kenneth Clarke, the Chancellor, inisted that he had had 'reluctantly' to increase taxes 'if we are to have a sustained recovery, with greater living standards and more jobs, as we all want.' Mr Clarke said on ITN that he was determined 'to make sure this government does not fall into public debt' which would damage industry, put up inflation and interest rates, and 'put us back where we were during the recession'.

But when Mr Clarke was told people would feel these tax increases in their pockets, he replied, 'In their pockets people will feel the benefits of low inflation, low interest rates and many people are seeing their mortgage rates go down.

'Even as we talk, eight million people are finding their mortgage rates going down.'

Tax arithmetic, page 16