Wider spread of tax net held as `proof of Tory betrayal' as nets spreads

COLIN BROWN

Chief Political Correspondent

The Chancellor was facing fresh embarrassment over tax last night after Inland Revenue figures showed that more people were now paying income tax than before the last election.

Some of the lowest income earners in the country are paying a higher proportion of their earnings in tax, opening the Tories to the charge of hitting the low-paid.

The figures, contained in the annual statistics of the Inland Revenue, will fuel demands for tax cuts by Tory grass-roots supporters who have tabled a barrage of motions criticising the Chancellor for reducing the value of married couples' allowance and mortgage interest relief.

Angela Knight, the Economic Secretary to the Treasury, said more people were in work and more people were earning money. "That's what these figures confirm."

A Labour source said the Chancellor's decision to cut the married couple's allowance was responsible for drawing more people into the tax net. "They froze married couples' allowance and then reduced it. That is the reason they are drawing more and more people into paying taxes," she added.

Andrew Smith, the shadow Chief Secretary to the Treasury, said the figures were "renewed proof of the Tory betrayal on tax". They chimed with Labour research which has revealed many disillusioned Tory voters feel betrayed by Conservative election pledges on tax.

"Tory betrayal is now reaching further than ever before. It is not only those at the bottom end of the scale who are suffering, but middle-income Bri-tain is also feeling the pinch of Tory tax hikes," Mr Smith said.

The figures show that a married man on half average earnings, who paid about 9.6 per cent of his earnings in tax before the election, is now paying 12.1 per cent in tax, an increase of nearly 30 per cent.

A married man on average earnings - about pounds 19,328 for a one-earner family - is paying 7 per cent more than in 1992-93; those on five times the average are paying 2 per cent more.

A married man with two children started paying income tax at about 28.6 per cent of earnings in 1992-93, but his threshold for starting to pay tax is now 23.8 per cent.

In 1992-93, 25.4million people were registered as taxpayers by the Inland Revenue, but that has risen to 25.7 million.

Tony Blair, the Labour leader, is expected to use the figures to deflect attacks by the Liberal Democrat leader, Paddy Ashdown, who has challenged Labour to vote against tax cuts if they are offered as a pre-election sweetener.