Darling squeezes the rich with election budget

ALISTAIR DARLING turned the screw on the better off yesterday as the battle lines were drawn for the general election.

In his final budget before polling, the Chancellor announced help for first time home buyers and young jobless people.

However, he also unveiled a series of measures that will hit wealthier people, saying: “I believe those who have benefited the most from the strong growth in incomes in past years should now pay their fair share of tax.”

Mr Darling confirmed that the threshold for residential property stamp duty would double from £125,000 (€140,000) to £250,000 from midnight last night.

But to cheers from Labour MPs he also announced that the move would be funded by an increase in stamp duty to 5% for residential property over £1 million from April next year.

There was further bad news for higher earners – already facing a 50% tax rate on earnings over £150,000 – when Mr Darling confirmed the end of some personal allowances.

He said that, for people with incomes over £100,000 a year (the top 2%), the value of their personal allowances would gradually be removed.

He also said tax relief on pensions will be restricted from next year, but again only for those with incomes above £130,000 a year.

And the Chancellor said he was freezing the inheritance tax threshold for another four years to help pay for the costs of care for older people.

Conservative leader David Cameron dismissed the package, saying: “Labour have made a complete mess of the British economy and they have done nothing to clear it up. They have doubled the national debt and, on these figures, they are going to double it again.”

Taunting Gordon Brown, Mr Cameron said: “The biggest risk to the recovery is five more years of this prime minister.”

However, the Tories faced an awkward moment when Mr Darling announced a deal to clamp down on tax avoidance in three countries including Belize, where Tory deputy chairman Lord Ashcroft is based.

The announcements affecting the better off are likely to be seen as part of Labour’s election strategy, with the Tories – still seen by some as the party of the privileged – being challenged to oppose the moves.

Justifying the measures, the Chancellor told MPs: “Looking across all the tax rises since the beginning of this global crisis, 60% of them will be paid for by the top 5% of earners.

“We have not raised these taxes out of dogma or ideology. We are determined to ensure our overall tax regime remains competitive.”

The Chancellor said he was standing by his forecast that the economy would grow by 1% to 1.5% this year, although he slightly downgraded his prediction for next year to 3% to 3.5% compared with the 3.5% in the PBR.

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