Election '97: Taxes: the big unanswered question

With just one week to go before polling day, the one big question that remains unanswered is: What will happen to taxes under Tony Blair or John Major?

The blunt answer is that they can be expected to go up. The Treasury Red Book, giving forecasts of tax burden, shows a steady increase up to 2002 - providing the official cover for both parties to put taxes up.

At the start of the campaign, The Independent posed a number of critical questions that would need to be answered, and most of them have been answered, insofar as any politician ever answers straight questions.

Would Labour take Britain into a single currency? Of course it would, though only after the same "triple-lock" safety process offered by the Tories; of Cabinet, Parliament and referendum approval.

Would Mr Ashdown keep Mr Blair in power without proportional representation? There has been no precise answer to that, though it has not been pressed too hard.

But the big remaining question is on tax - and neither the Conservatives nor Labour will give a hard answer on that - probably because most politicians and City analysts expect taxes to go up, whatever happens, and whoever wins.

While Labour has made no secret of its plans for a windfall tax on the privatised utilities, there are undoubtely hidden agendas on both sides of the political divide. Yesterday, Gordon Brown, the shadow Chancellor, again concentrated fire on the Tories' historical weakness for increasing VAT.

"If the Conservatives win again," he told an election press conference, "nothing will stop them increasing VAT on fuel to 17.5 per cent and extending VAT further."

John Major has shown a marked reluctance to answer questions about VAT. When The Independent repeatedly asked him whether he would give a commitment not to increase the rate or extend the VAT base at the start of the campaign, the Conservative leader repeatedly dodged the question.

He said: "I cannot conceive, except in the most exceptional circumstances that cannot be foreseen at the moment, that we would need to increase general tax levels in the next Parliament, given our public expend- iture plans and the outlook for the economy.

"So I think that is a perfectly clear answer to the points you have made about value-added tax and subject to quite unexpected events I'd expect that to remain the situation."

Asked for the same pledge in the 1992 election campaign, Mr Major told The Independent: "We have no plans and no need to extend the scope of VAT."

Labour has said firmly that it will not extend the base of VAT to basic essentials - food, children's clothes, books and newspapers and public transport fares - and that it will reduce the rate of VAT on domestic power and fuel bills to 5 per cent, the lowest level now allowed under European law.

Mr Brown and Mr Blair have also made commitments that they will not increase basic 23 per cent and 40 per cent rates of income tax during the lifetime of the new parliament.

But there is no Labour commitment on the tax allowances or the thresholds at which income tax is paid, although Mr Blair has said he would like to reduce the tax burden on the average family.

Only the Liberal Democrats have marked themselves out as the party of tax and spend, with their promise to increase the basic rate of income tax by a penny in the pound to fund more spending on education and a new higher rate band of 50p for those on taxable income in excess of pounds 100,000.

Their plans would mean that half of the 25 million income taxpayers would be worse off, but even they misleadingly said their plans to take 500,000 low-pay taxpayers out of income tax would reduce tax "for 99.5 per cent of all income taxpayers."

THE INDY EIGHT

QWhat will happen to taxes under Blair or Major?

Q If things go badly, would the Tories take us out of Europe?

QWill Blair back voting reform if he wins?

Q Would Labour take Britain into a single currency?

QWill the parties spend more on schools - and who loses?

QWould Ashdown keep Blair in power without PR?

QCan Labour match the Tory pledge on NHS cash?

QWhat do the parties mean by radical reform of welfare?