Stephen Byers: Abolish this 'tax on death'
Posted on 08/20/2006 12:17:33 AM PDT by bruinbirdman
One of Tony Blair's closest political allies has issued an explosive demand for the Government to scrap inheritance tax.
Stephen Byers, the former transport secretary and a leading Blairite "outrider", claims that the tax, which brought in a total of £3.3 billion last year, is "a penalty on hard work, thrift and enterprise".
Writing in The Sunday Telegraph today, he brands it a "tax on death" and calls for it to be abolished.
His remarks will be seen as the political equivalent of lobbing a grenade under the door of Gordon Brown, the Chancellor, who jealously guards all areas of tax policy.
It risks setting off another round of damaging in-fighting between supporters of Mr Blair and Mr Brown in the run-up to Labour's conference in Manchester next month, and will add to speculation surrounding the Prime Minister's departure date.
According to Mr Byers, scrapping inheritance tax - which, he argues, was originally meant to apply to the very wealthy - presents a "challenge" to Mr Blair's successor but would send a "powerful message" to the electorate. The main signal would be that, even though Mr Blair had gone, the middle-class voters who helped to sustain Labour through three successive election victories had not been forgotten.
Inheritance tax, currently levied on all estates worth more than £285,000, has the scope to bring "millions within its net" because of "soaring house prices".
His outspoken demand is likely to provoke a furious reaction from John Prescott, the Deputy Prime Minister currently "minding the shop" while Mr Blair is on holiday.
It also puts the Conservatives on the spot. Under David Cameron, the party has so far made no specific commitments on tax at all.
However, its biggest political target is Mr Brown, seen as by far the likeliest successor to Mr Blair as Labour leader.
A source close to Mr Brown accused Mr Byers of trying to make "trouble in the party".
Mr Byers writes in this newspaper: "We know that Tony Blair will stand down at some stage before the next election. The danger for Labour in electoral terms has always been that when he departs… voters will feel that the pragmatic and modernising approach of New Labour has gone with him.
"The challenge for his successor is to demonstrate that this is not the case and to show that they are in touch with the British people. "[The abolition of inheritance tax] would show that New Labour is prepared to look again at the tax system to ensure that it is grounded in fairness and reflects the modern world in which we live."
Mr Byers, who resigned as transport secretary in 2002 after a series of scandals linked to his department, retains close links with Mr Blair and is consulted by No 10 on many issues.
It is understood that the Prime Minister has not personally sanctioned Mr Byers's direct call to scrap inheritance tax, which the former Cabinet minister couples with a suggested rise in "green taxes" to make good the deficit.
However, Mr Blair is known to have urged his inner circle to come up with "radical" policy suggestions as he seeks to enshrine his political legacy. Labour has been accused of using inheritance tax as a "stealth" measure. Four years ago, the number of estates above the tax threshold stood at just over two million. This could more than double by 2009. Government figures show that 37,000 people paid inheritance tax last year - more than double the 18,000 who paid it when Labour came to power in 1997.
Earlier this year Mr Brown put forward controversial proposed changes to the way the tax was applied to certain family trusts, which would have seen extra charges brought in, but he partially climbed down in the teeth of ferocious opposition.
Overall, his fiscal future was given a boost this weekend with news that the Treasury took £14.6 billion in income tax last month, a July record. He is on course to meet a borrowing target of £36 billion for this financial year.
Last night, a Treasury spokesman said inheritance tax was not unfair as it affected only "the top six per cent of all estates".
He added: "Anyone who wants to abolish it needs to explains how they would plug the £3.3 billion cost - equivalent to more than a penny on income tax and twice the amount we are spending on counter-terrorism and security this year."
22 July 2006: Inheritance tax on course to raise £3.6bn in a year
10 June 2006: Brown in second climbdown over trusts
Leader: Over to you Mr Brown...
Stephen Byers: Abolish IHT
Burden of inheritance tax has doubled under Labour
A fortune for the family at Number 10
'Why do they tax success?'
****
Here's hoping they're smart enough not to have to tie it to some kind of minimum wage hike.
:-)
Over here, the family with a small pizza business, a family farm, a beauty salon, etc. are punished with this abysmal economy killer.
The "death tax" sickens me.
It's communism, plain and simple.
Over here in America the Democrats should step forward to get rid of this horrible tax............ yet they move in lockstep to keep it in play.
It kills an economy's growth.
If only this was sincere. It's a shame that Mr Byers was only saying this to provoke Gordon Brown by getting a quick headline. In reality no mainstream UK political party is ever going to get rid of a tax bringing in £3 billion a year.
It's all sick. The death tax is an economic killer (no pun intended).
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