Shadow Chancellor Oliver Letwin claimed a refusal of paymaster general Dawn Primarolo to extend a government guarantee that there would be no increase in rates of tax beyond the election ‘is the clearest indication that there will be a heavy price to pay if Labour wins a third term’.
He said he had been warning for months ‘that we are on course for substantial tax rises if Labour wins a third term, amounting to an extra £900 for a person on average earnings’.
Primarolo said: ‘The government’s spending commitments are properly financed over the spending round and in the statements made in the Budget 2004.’
She added: ‘The government is committed in the lifetime of this parliament not to raise either the basic or the higher rate of tax.
‘Indeed we have been reducing the tax burden, particularly on those who are the lowest paid.’
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