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Gordon's legacy: tax hikes By Jeff Salway
Gordon Brown's legacy as chancellor amounts to a 10p increase on basic rate income tax, according to a new report. The study by City accountancy firm Grant Thornton found that during Brown's decade at Number Around 7p of the 10p hike is due to the chancellor's favourite trick: 'fiscal drag'. This entails raising tax thresholds more slowly than the rate at which earnings are rising, which in turn drags more workers into higher tax brackets. "Silently, the tax-take continues upwards, with fiscal drag raking in yet more revenue year on year," explains Francesca Lagerberg, head of Grant Thornton's national tax office. Official figures show that the number of higher-rate taxpayers has increased 58% since 1997, to 3.3 million. The findings were released on Tax Freedom Day on 1 June. This marks the day after which the average UK taxpayer can expect to stop working for the taxman and pocket their earnings instead. In the 1960s Tax Freedom Day fell on 24 April. But by the time Brown became chancellor in 1997 it was 27 May. And it has now slipped a further five days. Brown made headlines with his 2007 Budget by dropping basic rate income tax by 2p to 20p. However, Lagerberg says: "While those on higher incomes an at the upper limit of national insurance contributions (approximately £35,000) will receive an extra £325 in 2008/9, many on lower incomes will actually be worse off due to the removal of the 10% starting rate. They will be dependent on tax credits to prevent them losing out financially."
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