Letter: Labour tax poser

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Sir: You report (9 January) Tony Blair's statement that Labour will have no need to increase personal tax to carry out its programme. Most people would take this as a commitment that, overall, personal taxes will not increase under a Labour government.

However, Ken Clarke's 1993 and 1996 Budgets have instituted a "rolling programme" of personal tax increases over the next few years, most notably:

(a) annual increases, over and above inflation, of (broadly) 2p per litre of petrol/diesel and 7p per packet of 20 cigarettes; and

(b) the phased abolition, between 1998 and 2001, of the income tax relief on profit-related pay currently enjoyed by some four million employees.

The above tax increases are already built into the Treasury projections for tax revenue; according to the November 1996 Budget Red Book, their effect will be to increase taxes by the equivalent of 3p on the basic rate of income tax between the current tax year 1996/97 and tax year 1999/2000.

Labour will at some stage be asked whether they intend to reverse the above increases or to confirm that overall personal tax will rise under Labour.

M C FITZPATRICK

Head of Economics

Chantrey Vellacott Chartered Accountants

London WC1

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