Brown hints at tax cuts still to come

GORDON BROWN insisted yesterday the Budget had reduced taxes, contrary to Opposition claims, and dropped hints of future tax-cutting Budgets.

In tetchy exchanges with Conservative MPs on the House of Commons Treasury Committee, Mr Brown denied charges of "fiddling" the figures published in the Budget Red Book earlier this month.

David Ruffley, a former adviser to Kenneth Clarke, said the tax burden would be higher by the end of this Parliament. He said the published figures had reduced the apparent tax burden by treating the new Working Families Tax Credit as negative income tax. "You've got a lot of previous form on fiddling the figures," he told the Chancellor.

Mr Brown said even including the WFTC, the Budget had cut taxes between this year and next. "We are reducing the tax burden next year, and as for the forecasts for future years, we are forecasting further falls."

He added: "The forecasts do not take account of the Budget next year and thereafter."

Sir Michael Spicer, a Conservative MP, asked whether the three Labour Budgets combined had raised or lowered taxes. Mr Brown said the tax burden was forecast to be lower than under plans published by the previous government.

The latest twist in the row centred on calculations by the House of Commons Library, which excluded certain Budget measures to arrive at a net pounds 100m tax increase over three years.

However, Mr Brown said there would be a net pounds 4bn in lower taxes over three years. The Government had gone from a pounds 28bn deficit to Budget balance in two years, he told MPs.

The Red Book shows tax and national insurance climbing from 35.4 per cent of GDP in 1996/97 to an estimated 37.2 per cent in the current year, falling to 36.6 per cent in 1999/2000 and 36.7 per cent in the following year.

Adding in the WFTC, which is counted as negative tax, takes the burden for the next two years to 36.7 per cent and 37.2 per cent.