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May 1st, 2008

Dear Chancellor… What would be in your letter to Darling?

Posted by: Jennifer Hill

darling.jpgLabour might appear to have calmed the storm over the scrapping of the 10 percent income tax rate for now. But new research shows the extent to which Britons are peeved about the level of income tax.

When asked what would be their key requests of Chancellor Alistair Darling, the largest proportion of more than 3,000 people polled for Unbiased.co.uk — 31 percent — said they’d like to see a cut in income tax. And, it seems, many Britons feel an obligation to help the less well-heeled: while 12 percent would like to see it reduced for everyone, 19 percent want a cut for less affluent sections of society.

The issue was, perhaps unsurprisingly, found to be the most pressing for younger generations — those with long working lives and greater earning potential ahead of them. Around 44 percent of 18 to 24-year-olds surveyed want a cut, compared to 19 percent of 55 to 64-year-olds and 13 percent of those aged 65 to 74.

But the requests do not stop there: almost a quarter would ask the Chancellor to provide a better level of state pension, 6 percent want increased pay for public sector workers, 5 percent increased support for carers, the same percentage an increase in the inheritance tax threshold to 750,000 pounds (from a current 312,000 pounds), and 2 percent want the stamp duty thresholds to be reviewed.

Others would implore the Chancellor to reconsider public spending: 5 percent want funding for the third generation of nuclear deterrent to be scrapped, 4 percent call for a four billion pound cap on the Olympic budget; and the same proportion want more spending on environmental issues.

It’s easy to see why: soaring house prices have pushed more people into the inheritance tax net and sent stamp duty bills soaring, “fiscal drag” — whereby thresholds fail to rise in line with inflation — is pulling people into new and higher tax brackets, and interest in “green” issues is on an upward trend.

But don’t forget that there are simple things we can all do to keep the taxman’s hands off our cash. The nation is wasting a whopping 9.3 billion pounds in unnecessary tax payments — from the likes of people not making use of their individual savings account allowance (a total 7,200 pounds this year, of which 3,600 pounds can be stashed in cash), wasting tax credits and not taking steps to reduce their taxable estate for inheritance tax purposes.

April 15th, 2008

Should inheritance tax be raised?

Posted by: Stephen Addison

cash.jpgAs house prices have risen over the years, so have arguments over inheritance tax.

No longer the death duty of old, forcing the impoverished aristocracy to flog a few paintings from the family collection now and again, IHT has hit mainstream middle England. It has arguably overtaken council tax as the most politicised duty after income tax — witness the electric effect on Conservative fortunes when they pledged to raise the threshold to one million pounds at last Autumn’s party conference.

Opponents say IHT is basically unfair, the final insult that plunders estates on which all sorts of tax has already been paid and which grabs our money from the hands of our children.

But many in the Labour party see it as a wrecking ball to help demolish the walls of social inequality, as an open letter to Gordon Brown from a group of Labour MPs and academics shows.

Reduce IHT and you reduce your chances of encouraging social mobility and spreading the benefits of wealth, they say.

Do you agree? Should inheritance tax be going up, rather than down?