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Willetts: Brown must come clean on child benefit tax

David Willetts, Shadow Social Security Secretary at the morning press conference:

Gordon Brown has long wanted to tax Child Benefit. He was quite open about this in his 1998 Budget when he said 'there is a case for higher rate taxpayers paying tax on it'.

Labour are now saying that they don't intend to tax it. That's what Gordon Brown said in the 1999 Budget. He looked at it then and what he said in his Budget was 'my Budget decision is that Child Benefit will not be taxed.' Today he has referred you back to that remark in his 1999 Budget.

But just four days before that Budget, when the Budget Statement had already been written, Gordon Brown wrote privately, 'I believe there is a case - in principle - for higher rate taxpayers to pay tax on it. We will bring forward recommendations for reform in due course.' We know now that he plans big changes to child support in 2003. The crucial question is what will happen to Child Benefit then.

His plans to introduce an Integrated Child Credit in 2003 provide him with an opportunity finally to do what he has long wanted. The Integrated Child Credit will be a new means tested benefit for families and for him it offers an ideal opportunity to means test or tax Child Benefit at the same time.

He hasn't just got the opportunity, he has got the means as well. With the Children's Tax Credit he taxes either parent of the child if they are paying higher rate tax.

As well as an opportunity and a method, he has a motive too. The new Integrated Child Credit could cost £1 billion. It is not in his spending plans at the moment. He needs the money to finance it. It's the latest black hole in his spending plans - he needs to raise the money and his first instinct is always to tax hard-working families.


He hopes that the sheer complexity of the changes he is proposing in 2003 would enable him to camouflage his intentions. We've got the Integrated Child Credit, the Children's Tax Credit, the Working Families Tax Credit, the Child Care Tax Credit and Child Benefit as well. Families are completely baffled by these schemes and that's just what Gordon Brown wants.

So our challenge to Gordon Brown is very clear. We pledge not to means-test Child Benefit. We pledge not to tax Child Benefit. Will he match our pledges? Will he pledge not to means test Child Benefit throughout the next Parliament whatever other changes he introduces in 2003?

And will he pledge not to tax it throughout the lifetime of the next Parliament whatever else he does to child support in 2003?

We Conservatives have a positive agenda of tax and benefit reform to help families. We will increase the Children's Tax Credit for all families with a child under 5 by £200 each year. Labour have claimed today that we will abolish the Working Families Tax Credit. We are not going to abolish it. We are going to pay it the way parents want it, directly to the caring parent as a benefit. Nearly half a million parents will once more receive the money directly, not after complicated deductions from the payroll. And we will create a new Married Couple's Allowance, worth up to £1,000 a year for families with children 11 where one parent chooses to stay at home, or work part-time, to look after a child.

We are offering families a better deal. Labour are trapping them in ever more complicated means-tests and ever more onerous stealth taxes.

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