TaxPersonal TaxTories accuse Blair of planning NI hike

Tories accuse Blair of planning NI hike

Tory leader Michael Howard has accused the prime minister of planning to increase national insurance contributions (NICs) after winning the general election - currently expected in May.

Link: £100m bill to catch-up on NI crisis

He made the forecast amidst increasingly heated electioneering at Westminster after claiming the prime minister had ruled out increasing the top rate of income tax during a lengthy cross-examination by Commons committee chairmen.

In a subsequent prime minister’s question time in the Commons, Howard challenged Blair to give the same pledge for NICs, but Blair refused, reserving the right to make tax commitments plain in his manifesto. Howard therefore said it was now plain which tax would go up.

In fact, what Blair said to the committee chairman – after being challenged over remarks favouring a new higher rate from one of his advisers – was an indication of opinion rather than a pledge: ‘I am not in favour of raising the top rate of tax.’

Blair was also challenged during the session with the committee chairmen over inheritance tax as it starts to bite on those with modest homes, but insisted this was ‘best left to the chancellor in the budget.’

Commons Leader Peter Hain later refused to divulge the date of the Budget amidst increasing speculation it will be on Tuesday 22 March or – for maximum impact in the election campaign – on Tuesday 5 April, three days before Prince Charles is due to marry Camilla Parket Bowles.

The latter date is unlikely because Blair may want to announce the dissolution of Parliament just before or just after the wedding, and may need the time to deal with outstanding legislation and the intervening week is out due to the Easter holidays.

For polling on May 5 he must ask the Queen to dissolve Parliament on or before Monday 11 April.

During the evidence session, Blair said he saw no ‘black hole’ in the government’s books requiring a tax rise, admitting there was a continuing debate over the financial forecasts, but citing economists who are predicting the government will be able to keep the Golden Rule.

Blair hinted the Treasury is considering ‘what can be done on a European-wide basis’ if it loses the Marks & Spencer’s case, putting £20bn of revenue at risk.

He said the Treasury was ‘watching and tracking the situation very carefully’.

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