TaxPersonal TaxChancellor hits back at Ernst & Young tax burden claims

Chancellor hits back at Ernst & Young tax burden claims

Chancellor Gordon Brown this morning dismissed claims by a damning Ernst & Young backed economic review that the tax burden is the highest since the early 1980s.

The warning shot Item Club report published today claims that Brown last month commanded ‘a careless budget for an economy that could turn on a sixpence.’

Brown responded to the tax burden claims on BBC Radio 4 this morning by saying: ‘This is simply not true. The tax burden between this year and next year is actually falling. That is a fact.’

He dismissed the Item Club findings, which used the Treasury’s economic model, as ‘another pundits’ report.’The true figures are in the budget’, he added.

The Ernst & Young sponsored report argues that despite short-term growth and a ‘feel-good’ £15 billion budget surplus, rising income tax and falling investment could damage future prosperity.

Professor Peter Spencer, Item’s economic adviser, said: ‘Tax rates have fallen, but a large number of taxpayers are now paying more tax.’He said that the tax increase was due to ‘a number of allowances and tax breaks have been reduced or abolished.’

He added: ‘At bottom, however, it mostly boils down to the concept of fiscal drag: earnings have increased at double the rate of inflation.’

Shadow chancellor Michael Portillo commented: ‘The Item Club has shown that, despite their pre-election promises, taxes have gone up massively by stealth under Labour.’

Gordon Brown later today is due to outline details of the new pensioners’ tax credit in his James Meade Memorial Lecture at the London School of Economics.

Related Articles

Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

1m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

3m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

4m Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

5m Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

6m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

7m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

8m Alia Shoaib, Reporter
Italy grants first successful non-dom status application to former UK non-dom

Personal Tax Italy grants first successful non-dom status application to former UK non-dom

9m Emma Smith, Managing Editor