UK's Gordon Brown Taxes Rich To Help Fund Economic Recovery

LONDON — British Prime Minister Gordon Brown set out plans Monday to raise an income tax rate for the first time in three decades, abandoning a pledge that had carried his Labour Party to power.

The plan: squeeze the rich to pay for measures aimed at helping families and small businesses through the financial downturn.

Treasury chief Alistair Darling said that by mid-2011 those people earning more than 150,000 pounds ($224,000) would pay a 45 percent income tax rate, up from 40 percent _ the first increase since the mid-1970s.

Brown's predecessor as prime minister, Tony Blair, won office in 1997 with a promise not to raise the income tax. It was an important part of his effort to move the leftist party to the political center and have it embrace the business sector.

The pledge was repeated as Labour won successive elections in 2001 and 2005.

But Darling said Monday that Britain's top earners had seen their salaries double since 1996 and they must help balance a budget drained by a proposed a 20 billion pound ($30.2 billion) fiscal stimulus package aimed at pushing the country out of a 2009 recession.

"This higher rate of tax will only affect the top one per cent of incomes," Darling told lawmakers. Financial think tank the Institute of Fiscal Studies estimates about 400,000 people will pay the higher rate.

The Queen, Brown, senior financial executives and Britain's highly paid soccer players will be among those with higher tax bills. Brown earns 189,994 pounds ($287,000) a year.

"The fact that for the first time direct taxation on the very highly paid is to be raised is a hugely symbolic, and important practical, step," the leftist former London mayor Ken Livingstone wrote Monday on his Web site.

Reforms outlined by Darling are designed to help most low and middle income earners, a policy some read as an attempt to woo voters before an election.

Though Brown on Friday ruled out calling an election in the coming months, he must contest a national election before mid-2010, meaning Britons will have a chance to express themselves on the proposed 2011 tax hike.

The main opposition Conservative Party criticized the proposed tax increase.

"It is a precision-guided missile at the heart of a recovery," said Conservative lawmaker and economic spokesman George Osborne.

But the opposition said they would not pledge to scrap the tax increase if they won office. The Conservatives believe Brown hopes they'll commit to reversing the hike and then fight an election by casting his opponents as defenders of the rich.

Comments

[leeman79]

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