SHADOW chancellor George Osborne was last night at the centre of a row with Labour and the Treasury after he accused the party of hiding a £14bn “income tax bombshell”.<br /><br />He released what he called “secret” figures from the treasury, showing a 3p in the pound income tax hike over future years.<br /><br />But MPs hit back, saying Osborne was misleading voters on the government’s spending plans. <br /><br />The data shows the Treasury expects gross income tax receipts to increase sharply from £144.7bn in 2010 to £161.6bn in 2011/12.<br /><br />Each year £2.5bn will be raised by tax increases which have already been announced, such as the 50p rate for higher earners. <br /><br />Revenues from income tax will go up as the economy starts to grow, but the row focuses on the extent to which that growth will go towards higher tax revenues.<br /><br />Osborne says £14bn – equal to £2,770 per family – of the tax intake for 2011/12 is not accounted for in government projections, even allowing for a return to growth. <br /><br />Chief secretary Liam Byrne said the £14bn increase was based entirely on a predicted return to growth. <br /><br />But, Osborne asked “if the increases are down to growth, why are other taxes such as VAT and National Insurance, projected to rise more slowly than <br />the income tax take?”<br /><br />Treasury officials have said the situation is explained because income tax is hit by “fiscal drag”, where an increase in income pushes earnings into a higher tax band for VAT or National Insurance, meaning that workers will pay more tax.<br /><br />Other politicians also weighed in. Schools secretary Ed Balls said Osborne was “making things up,” while David Miliband, the foreign secretary, accused the opposition of “playing juvenile politics”.