Labour Forced To Drop Stealth Tax Rises

(Telegraph) – LABOUR HAS BEEN FORCED to abandon three stealth tax rises that Alistair Darling unveiled in last month’s Budget.

Following pressure from the Conservatives, the Government agreed to drop plans for a new tax on phone lines to fund super-fast broadband, increased taxes on cider and the scrapping of tax relief on holiday homes.

The tax hikes were abandoned following negotiations to fast-track the Finance Act – which introduces the laws necessary to enact the budget – through Parliament today ahead of the general election.

The Conservatives refused to sanction the fast-tracking of the legislation unless the three tax changes were dropped. The Treasury was forced to back down last night or face the prospect of failing to pass other key budget measures before the election on May 6th.

The move marks a coup for George Osborne, the shadow Chancellor, on the first day of the election campaign. It is understood that Philip Hammond, his deputy, and Conservative aides spent much of the day at the Treasury negotiating the revised budget.

Last night, Mr Hammond, the shadow chief secretary to the Treasury, said: “This is a major victory for businesses and consumers across Britain. The Conservatives have forced the Government to back down on three significant tax hikes.

“But the threat couldn’t be clearer – if Labour is re-elected all three taxes will come back. Only a Conservative Government will stop Labour’s tax increases.”

The tax on phone lines formed a key part of a flagship Labour plan to introduce super-fast broadband throughout Britain. Under the scheme, a new tax of 50p per month would have been introduced for each telephone line. It was estimated that consumers would pay a total of more than £100 million a year.

The Conservatives believe that broadband should be installed and paid for by private firms.

The changes to tax relief on furnished holiday homes were estimated to hit more than 120,000 self-catering holiday businesses – costing the holiday home owners an average of £4,000 each a year. The Conservatives warned it could have a far-reaching impact on the British tourism industry.

The third proposed tax rise to be abandoned was a ten-percent increase, above inflation, on the cost of cider. Mr Darling had argued this was necessary as cider was taxed too lightly compared to other alcoholic drinks. However, it was argued that the sharp tax rise could badly damage the British cider industry.

The Conservatives are expected to increasingly focus on their plans to lower taxes during the election campaign. Some senior Labour figures are concerned about the impact of the Tory pledge to abandon the proposed National Insurance rise next year. David Cameron said yesterday it threatened to “wreck” Britain’s economic recovery.

Conservative plans to offer tax breaks to younger married couples are set to dominate the election campaign next week.