A Tax on the Middle Class

Article excerpt

Abortion questions Olympic tears THE PROPOSAL from the Institute for Public Policy Research to raise inheritance tax on the wealthy keeps up the pressure on Chancellor Gordon Brown over this increasingly controversial tax.

Last week, shadow Chancellor Oliver Letwin drew attention to the large number of ordinary middleclass families now being caught by inheritance tax, which is levied at 40 per cent on all estates over [pounds sterling]263,000. The reason more people are getting caught is house prices: since 1997, these have risen by 130 per cent, during which time the threshold for inheritance tax has gone up by just 22 per cent.

At the same time, Mr Brown is closing a range of loopholes used by some to avoid the full impact of the tax. Inheritance tax is certainly a growing problem for middle class families, especially in the South-East: [pounds sterling]263,000 will barely buy a modest family home in many places in London. The IPPR's proposal is for a lower rate of inheritance tax up to [pounds sterling]288,000, then the current rate up to [pounds sterling]763,000, and a higher 50 per cent rate for estates worth more than that amount. In practice this would make little difference to most of the middle classes - yet such a move would still carry a politically charged message, much as Labour's proposed income tax increases did in the 1992 election. For that reason, the Treasury has been quick to deny suggestions that it will adopt this proposal from the Government's favourite think tank. In fact, taken together with other property taxes, inheritance tax does not amount to an especially severe burden compared with other countries in Europe and North America. But the belief of Britons, especially the middle classes, in their right to pass on their homes to their children is powerful, and shifts in inheritance tax - whether caused by changes in policy or by house prices - are politically dangerous.

FRESH questions are being raised about late abortions. As we report today, almost 100 MPs now believe that the time has come to reassess how late in a woman should be allowed to have a termination - currently, up to 24 weeks into pregnancy. The new mood has been prompted by a number of developments, such as recent statistics showing steadily rising numbers of abortions - but most dramatically, by astonishing new ultrasound pictures of foetuses in the womb, first published by this newspaper in June. …