BLAIR FURY AT TAX RISE CALL; PM and Brown Roast Hain over Higher Top Rate

By Reiss, Charles; Murphy, Joe | The Evening Standard (London, England), June 20, 2003 | Go to article overview

BLAIR FURY AT TAX RISE CALL; PM and Brown Roast Hain over Higher Top Rate


Reiss, Charles, Murphy, Joe, The Evening Standard (London, England)


Byline: CHARLES REISS;JOE MURPHY

A MASSIVE Cabinet row exploded today over a plan to tax the rich more to ease the burden on middleincome and low earners.

The move, which could see the 40 per cent top rate of income tax raised to 60 per cent or more, came from the newly-appointed Leader of the Commons, Peter Hain.

In a speech to be delivered tonight but leaked in advance, he says: "How can we ensure that hardworking middle-income families and the low paid get a better deal, except by those at the very top of the pay scale contributing more?"

The proposal was instantly slapped down by Tony Blair and Gordon Brown, apparently united in fury.

The Prime Minister delivered an extraordinary direct dressing-down to the man he promoted only last week.

Mr Blair, confronted with a first-class Cabinet bust-up while attending the EU summit in Greece, said: "Tax policy is not going to change.

"We're not going to be raising the top rate of tax."

Aides made no attempt to deny Mr Blair had spoken directly to his erring minister to tell him just what he thought about his sudden new tax policy.

One said: "The Prime Minister made his displeasure abundantly clear."

Mr Blair's annoyance, when questioned by reporters at the suggestion Labour could be saddled once again with a soak-the-rich reputation, was evident. He said: "I am not writing our next manifesto now but I haven't spent the last 10 years ensuring the Labour Party's in a position where we say 'we're not raising top rates of tax', to change the position now."

He added: "My concern is not to penalise the people who are successful and doing well and earning a lot of money. My concern is to lift up the incomes of those at the lower end of the income scale."

A Treasury spokesman said: "It is the Chancellor in Budgets that makes decisions on taxation."

And, in an extraordinary move, Mr Hain was ordered by Mr Blair's communications chief, Alastair Campbell, to go on air and back down. Mr Hain, who had earlier refused to be interviewed, suddenly agreed to appear on Radio 4's Today programme.

Although he retreated, he did not surrender. In a gesture of defiance he said that, although he was not proposing punitive high tax rates, he still believed that "those at the top of the scale would be prepared to contribute a bit more".

He said: "I am a member of the Cabinet and I think I am entitled to ask the question and ask for an honest debate."

Mr Hain's proposals would appeal to anyone earning between [pounds sterling]35,000 and [pounds sterling]50,000 a year. By raising the 22 per cent basic rate ceiling from its current level of [pounds sterling]35,115 to all incomes below [pounds sterling]50,000, it would mean that such earners could be [pounds sterling]2,860 better off a year - about [pounds sterling]50 a week.

No 10 was unable to say whether Mr Hain would deliver his speech in Cardiff tonight as drafted. The Prime Minister's spokesman would only say: "Wait and see."

The affair left Mr Blair's authority under unprecedented challenge. Some believed it also left Mr Hain moving towards a position where he might challenge the Chancellor's authority and leadership hopes. …

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