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Portillo: How would Labour raise the £10bn they would need?

Speaking at a press conference at Conservative Central Office, Rt Hon Michael Portillo, Shadow Chancellor:

"Labour Governments always mean higher taxes.

"Four years ago, Tony Blair promised that this Labour Government would be different. Since then, Labour have given us forty-five stealth taxes and the tax burden has risen by the equivalent of 10p on the basic rate of income tax. At a time when companies have to compete in a global marketplace, Labour have increased taxes on business by £5 billion a year. Labour's stealth taxes have meant that families, pensioners and disabled people who rely on their cars now have to buy the most expensive petrol in Europe.

"Labour have spent four years putting up taxes. Given the chance, they would do so again. Labour believes that Government money belongs to the Government. It is theirs to spend - and waste - as they see fit and in whatever quantities they want. Conservatives never forget that taxpayers' money comes from hard-working people.

"At the last election, Labour promised to keep taxes low. This time, Gordon Brown has given us a thinly veiled promise that taxes would go up again if Labour were to win on Thursday.

"Labour want to spend taxpayers' money faster than people can earn it. It is Gordon Brown's proudest boast. Labour's policy on spending dictates their policy on taxes: under Labour, taxes would keep on going up.

"Economists at the Institute for Fiscal Studies calculate that if Labour were to win the election and carry on increasing Government spending at their present rate throughout the next Parliament, they would need to raise £10 billion in extra taxes.

"Labour must now say which stealth taxes they would impose to raise the £10 billion that they would need. People cannot be allowed to go to the polls without knowing how much more tax a Labour Government would expect them to pay.

"Gordon Brown considers that question an impertinence. He fudges the issue by saying he can't give specific assurances on each and every tax there is because he doesn't know what unexpected events lie in store. But it's not the unexpected that would require Gordon Brown to put up taxes, it's what he plans for. If you want Government spending to grow faster than the economy, you have to put up taxes. That's what he wants and that's what he would have to do.

"So which taxes would go up?

"The tax on petrol has been Labour's favourite stealth tax. For everyone else, it is the most hated and regressive stealth tax of the lot. If Labour were to raise the £10 billion that they would need by increasing petrol tax, the price would have to rise to £6 a gallon. If it's not to be petrol tax, then which taxes are Labour planning to increase?

"At the last election, Gordon Brown promised not to abolish the National Insurance ceiling. This time he will not give that promise. When Patricia Hewitt said it would not happen, Tony Blair made it clear that she was out of line. 'What I can't do,' he told Jeremy Paxman last night, 'is sit here and write a Budget'. With Old Labour, tax rises were a manifesto promise. New Labour thinks they should be a Budget surprise.

"Removing the national insurance ceiling would hit everyone earning over £29,900 a year. Most would face a 50 per cent rate of income tax in all but name. Labour's promise on income tax rates has been broken before polling day. Gordon Brown will not promise not to raise the National Insurance ceiling above inflation. He will not even promise not to abolish it altogether. Middle-income earners can know what to expect.

"That would still raise just a fraction of the £10 billion that he needs. The Institute for Public Policy Research - Labour's favourite think tank - recommends taxing pension contributions to raise a bit more. For higher rate taxpayers, they say, tax relief should be restricted to 22 per cent. That would mean for every £100 that a higher rate taxpayer wanted to put into his pension fund, £18 would go to the Government. When Labour needs money, people's savings are always the first place they look. Within two months of the last election, Labour taxed people's pension funds. This time, Gordon Brown will not rule out taxing their pension contributions. Those earning over £33,395 a year could expect to lose an average of £1,250 a year each.

"Then there's child benefit. Behind closed doors, Gordon Brown says child benefit should be taxed. Under pressure in an election campaign, he says he would not do so - a promise he did not want to give in Labour's manifesto. But he only promises that the first £15 will go to all. He has left the door wide open for means-testing child benefit in respect of a family's second child.

"Would Labour get the £10 billion they need from raising the price of petrol to £6 a gallon?

"Will they give a straightforward promise not to abolish the National Insurance ceiling?

"Will they promise not to tax pension contributions when they've already taxed pension funds?

"Will all child benefit payments remain universal?

"Labour need to raise £10 billion in new taxes. It's no good just telling us which taxes would not go up. They must say now which stealth taxes they would impose."

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