Norwich households stung by 50% tax rise

1.00.00pm BST (GMT +0100) Tue 20th May 2008

Households in Norwich have been stung by an average 50% rise in their annual tax bill since Labour came to power, according to new research highlighted by the Norwich Liberal Democrats.

In simple cash terms, ignoring the effect of inflation, the increase is an even more eye-watering 76%. This means nationally taxpayers pay an additional £233 billion per annum, equivalent to an extra £8,500 each year for each Norwich household. The average Norwich household will now pay an astonishing £20,700 in tax every year. Many of these tax increases have been stealth taxes hidden form the public and, most shockingly, despite the tax increases front-line public services such as post offices continue to be cut.

Brian Watkins, Leader of the Norwich Liberal Democrats, commented "This report highlights the extraordinary tax burden Norwich households are now under. Ordinary families are finding it difficult to cope and, as the abolition of the 10p tax rate showed, Labour has made things worse. Desperate U-Turns from Gordon Brown are not enough to reverse this growing crisis."

The report from the TaxPayers Alliance highlights three areas where taxes have gone up under Labour since 1997. "Big ticket" taxes such as income tax, national insurance and council tax have increased with national insurance doubling in the period 1997/98 - 2007/08. "Stealth taxes" often hidden away from the public have rocketed under Labour. These include the abolition of the 10p tax rate which was hidden away in a complex package of reforms and the introduction of a series of new charges on things like hospital parking. Labour has also allowed "fiscal drag" to rob taxpayers. Through this tax thresholds have failed to keep pace with inflation and rising wages, for instance the current tax-free allowance rate has not kept pace with the rise in average earnings. The Liberal Democrats recently announced plans to increase this threshold to £7,185 rather than the £6,035 proposed by Labour. Fiscal drag has also affected stamp duty, inheritance tax, capital gains tax and small companies' rate of corporation tax.

Despite the extra £233 billion per year raised in taxation, front line public services continue to suffer as Brian Watkins points out "This is the extraordinary thing, over the last ten years people have been taxed like they have never been taxed before but in the same period we have lost 15,000 hospital beds nationally, seen cuts in GP out of hours services, seen a growing number of unqualified teachers filling the gaps in schools, 600 police stations have closed and 4,000 Post Offices have closed. In Norwich we are fighting against further post office closures and local people are fighting the closure of the NHS Walk in Centre in Dussindale. People are rightly asking where their hard earned money has gone."

He went on "What we need is a fairer tax system that is based on people's ability to pay, a simpler system that is more transparent and understandable and a greener tax system that gives incentives to sustainability. We would abolish council tax, lower income tax to 16p, increase the tax-free threshold to over £7,000 and avoid the stealth taxes that Gordon Brown has turned to time and again. At this difficult economic time people need some support"

Simon Wright, Liberal Democrat Parliamentary Spokesman for Norwich South, said:

"The current system of taxation is not fair. Low and middle income earners in this country shoulder too heavy a tax burden. The unacceptable reality is that today the poorest pay a higher proportion of their income in tax than the very rich. Wealth inequality has risen since Labour came to power."

In February this year the Labour controlled city council agreed a 3.7% council tax rise meaning Norwich has the highest district council tax in Norfolk.

The TaxPayers Alliance full report can be found here http://tpa.typepad.com/home/files/the_great_british_taxpayer_ripoff.pdf

A detailed policy document on Lib Dem tax proposals can be found here http://www.libdems.org.uk/economy/reducing-the-burden-policies-for-tax-reform.0555.html