Labour pledges not to raise income tax
Gordon Brown has promised not to increase income tax should Labour win the general election.
In its election manifesto, the Labour Party pledges not to raise income tax, increase the minimum wage, extend paternity leave and to introduce a “toddler tax credit” from 2012.
In a speech in Edgbaston, Birmingham, the Prime Minister said Labour would be “relentless reformers” of financial markets and public services if the party won for the fourth time.
Families are a key part of Labour’s manifesto. From 2010 a "toddler tax credit" would provide £4 per week extra for families with one and two-year-olds who earn less than £50,000 a year. Fathers would also get four weeks’ paid paternity leave - double the existing leave.
The free nursery place scheme would be extended so three and four-year-olds also receive 15 hours a week of free nursery education.
On the economy, Brown said Labour would secure the economic recovery and half the deficit by 2014 through growth, fair taxes and cuts to spending. However, he said there would be no rise in the income tax rate and promised not to extend VAT to food, children's clothes, books, newspapers and public transport fares.
But critics pointed out that, in its 2005 manifesto Labour promised not to raise income tax but later introduced a new 50p tax rate for people who earned over £150,000 a year - which took effect at the beginning of April.
The 76-page manifesto also states that the minimum wage will rise "at least in line with average earnings". The government, as an employer, would offer a living wage to all staff. This is currently set at £7.60 per hour, higher than the minimum wage of £5.80 for workers aged 22 or over.
If Labour wins the election there will also be a new £40-a-week Better Off in Work guarantee in an attempt to prevent people becoming trapped on benefits that pay more than a wage.
There were further pledges to push for an international bank levy and work guarantees for the long-term unemployed. Also to tackle unemployment, every young person would receive guaranteed education or training until the age of 18, with 75% going on to higher education or workplace training by the age of 30.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.