Wringing the Middle Class; Brown's Big Squeeze Adds Up to 4p on Income Tax
Hughes, David, Daily Mail (London)
Byline: DAVID HUGHES
GORDON Brown slapped an eye-watering tax rise on Middle Britain yesterday to fund lavish National Health Service spending.
A swingeing increase in National Insurance contributions and a freeze on income tax allowances will raise a massive [pound]9billion a year.
The double tax whammy will let the Chancellor give NHS spending an unprecedented boost to see it increased by [pound]40billion a year in five years' time.
Mr Brown's extra tax take to cover this staggering new bill is the equivalent of adding almost 4p to basic rate income tax.
The NI move means top rate taxpayers will effectively be paying 41 per cent on their earnings after the changes kick in next April.
Old Labour MPs whooped with delight as the Chancellor swung the party back to its tax and spend roots, in the process reading the last rites over Tony Blair's Third Way.
But it amounts to anenormous political gamble. Mr Brown has staked his and Labour's reputation on pouring billions into the bottomless pit of the NHS and its bloated bureaucracy. Taxpayers will want to see real results - and fast.
An apprehensive Downing Street is bracing itself for a voter backlash as the full implications of Mr Brown's tax package sink in. Everyone who works will pay more and employers will also have to pay the new NI rates, adding a thumping [pound]4billion a year to industry's costs.
A police inspector earning [pound]37,000 a year will be [pound]27 a month worse off while a senior nurse on [pound]34,000 a year will be [pound]24 a month worse off.
Everyone on average earnings of [pound]21,400 will be [pound]15 a month worse off.
The Chancellor sugared the pill with a new Child Tax Credit that will mean cash for families with children.
It will be worth up to [pound]1,400 a year for families earning up to [pound]50,000 and then taper away with a cut-off of [pound]58,000 - or [pound]66,000 for the first child.
But middle earning-professional couples - two senior teachers earning [pound]32,000 each, for example - will find that little comfort.
Extra NI payments will cost them [pound]299 a year each, they will not qualify for the new credit - yet they will lose the [pound]520 children's tax credit they currently get. Overall, they will be [pound]1,118 out of pocket.
Mr Brown even froze the income tax personal allowance for next year.
Raising it in line with inflation would have let workers keep about [pound]2 more a week. Instead the Treasury will rake in an extra [pound]700million.
Iain Duncan Smith said Labour had returned to its old tax and spend ways - 'The sun goes down. The tide goes out.
And Labour raises taxes.' The Tory leader accused the Chancellor of breaking an election pledge. …