Tories hit out over allowances

THE Tories yesterday accused the government of hiding a £2.2bn stealth tax in the small print of the Budget.

The chancellor introduced a freeze on all income tax bands in his Budget instead of following normal practice and raising them in line with inflation.

With retail inflation at 3.7 per cent, the tax-free personal allowance should have been increased from £6,475 to £6,715 – a rise of £240.

At the 20 per cent basic rate, this means that a taxpayer will pay £48 extra this year, while a two-earner couple will be liable for an extra £96-a-year.

By freezing the allowance, Alistair Darling will gain £2.2bn in revenue in 2010 and £2.8bn in 2011 – making this move his single biggest tax rise.

Despite this, the chancellor did not announce the measure in his statement to the house, leading to accusations of a cover-up.

Shadow chancellor George Osborne accused Labour of introducing a “stealth tax” that would affect 30m taxpayers.

He added: “The chancellor said nothing about the biggest tax rise in the Budget. That tells you everything you need to know about Labour’s cynical tricks and their priorities.

“The bill for Gordon Brown’s economic mistakes is going to be paid by every working family in Britain.”

Tory leader David Cameron told the government it should be “ashamed” by the state of the public finances, and said the Tories were the only party with a “credible plan to deal with Britain’s record debt – starting now”.

And he accused the government of stealing his policies on stamp duty and higher cider duty, saying “the only new ideas in British politics are coming from this side of the house”.