British Prime Minister Gordon Brown’s government used its last budget before a looming national election to take from the rich and give to the poor, raising accusations it is invoking a class war as it attempts to win over recession-weary voters.
With just weeks to go before the national poll, the ruling Labour Party said on Wednesday it was hiking taxes on the wealthy to pay for breaks given to lower income earners such as scrapping house purchase duties for first-time home buyers.
As Labour wallows behind the main opposition Conservative Party in the opinion polls, Treasury chief Alistair Darling’s budget statement was light on financial detail but heavy on political rhetoric.
PHOTO: REUTERS
“This will be a budget to secure the recovery, tackle borrowing and invest in our industrial future,” Darling told lawmakers in the House of Commons. “It will continue targeted support for business and families where and when it is needed.”
At the center of that promised support was a headline-grabbing pledge to drop a so-called stamp duty on house purchases made by first-time buyers on properties costing up to £250,000 (US$370,000).
That measure will be funded by a doubling in the stamp duty to 5 percent on all properties costing more than £1 million from the start of next month.
In other Robin Hood-like measures, Darling said an increase in income tax would not hit anyone earning less than £25,000 a year, but there would be significant tax increases and reduced personal allowances on those earning more than £150,000 a year.
Darling attempted to downplay the moves, saying they were not made “out of dogma or ideology” but a determination to ensure the country’s “overall tax regime remains competitive.”
However, commentators in class-conscious Britain were quick to jump on the implications. The right-wing Daily Mail newspaper blared: “Now it’s a class war! Darling hammers the better off with tax rises,” referring to “punishments” for the better off.
And in a further dig at the Conservatives’ blue blood, Darling announced that Britain had signed a tax information exchange with three offshore tax havens, including Belize where the Tories’ controversial multimillionaire Deputy Chairman Michael Ashcroft is based. Ashcroft’s admission earlier this month that he has non-domiciled tax status, meaning he doesn’t pay UK taxes on foreign earnings, caused the opposition much embarrassment.
The rhetoric seemed aimed at defining differences between Labour and the Conservatives ahead of the election, as they continue to bicker over whether economic stimulus should be curbed quicker to get record debt levels under control.
Conservative leader David Cameron, who has pledged to announce a new budget within weeks if his party is elected in the poll expected on May 6, said Britain needs a credible plan to deal with its debt starting immediately “to show the world we are back open for business.”
“We need real action to get our economy moving and urgently.”
Darling stuck by Labour’s contention that doing so would risk a recovery that “is still in its infancy” and announced a £2.5 billion one-off growth package as a centerpiece of the budget.
A likely unpopular move was the decision to increase duty on alcoholic cider by 10 percent above inflation from midnight on Saturday, an attempt to crack down on the cheap alcohol fueling Britain’s booze culture.
The overall verdict from most economists and lobby groups was that real analysis won’t be possible until after the general election when whichever party wins will be more upfront on spending plans.
“At the end of the day, the reality is that the post-election budget, which will be much harsher, is the only event of any importance,” Nick Hopkinson, Director of Property Portfolio Rescue said.
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