Daily Mail: TAX RISES? YOU AIN'T SEEN NOTHING YET!

BY DANIEL MARTIN POLITICAL REPORTER

DARLING 'WOULD HAVE TO PUT UP INCOME TAX BY 3P AFTER NEXT ELECTION'

VOTERS face the equivalent of up to 3p more on income tax after the next general election, economists warned yesterday.

An analysis of Wednesday's Budget by the highly-respected Institute for Fiscal Studies showed that spending would have to be slashed by billions if the Chancellor did not want to break his economic rules.

They said it could mean that ministers were planning tax increases to avoid having to cut back on schools and hospitals if they win the next election.

It added to the gloom around the Budget, in which middle- class households were hammered by rises in tax for drinkers and family car owners.

Robert Chote, director of the IFS, said details hidden in the Budget report revealed that the annual growth in spending will be cut to 1.8 per cent in 2012 and 2013, meaning a reduction in spending by around £8billion by 2013. That would be equivalent to an income tax rise of 3p in the pound.

'All in all, there is a danger that we are seeing the history of Labour's second term repeating itself,' Mr Chote said. 'Gordon Brown insisted repeatedly after his forecasts began to go awry in 2002 that there was no problem with the public finances - but as soon as the 2005 election was won he announced a spending squeeze and introduced a series of tax-raising budgets.

'If there is a fiscal repair job to be done, Mr Darling and Mr Brown may be leaving it until after polling day.' The tax rises or spending cuts would be necessary to ensure Labour does not have to borrow even more money. This would breach its rule that the national debt should not exceed 40 per cent of the budget.

Shadow Chancellor George Osborne said: 'With extra taxes pencilled in for years to come, the message from the Chancellor is clear: No jam today and no jam tomorrow.'

Matthew Elliot of the TaxPayers' Alliance said it looked as if Labour was planning a giveaway Budget before the election, followed by a tax-rising Budget if it wins.

Analysis by the IFS also revealed that the middle classes will find themselves disproportionately affected by the rises in fuel and alcohol taxes, while poorer families with children will see these taxes cancelled out by rises in child benefit.

The richest 50 per cent of the population will see their incomes fall by around 0.2 per cent as a result of the Budget - while the poorest half will benefit from up to 0.6 per cent more money. For pensioners, the rise in the winter fuel payment will be only a one-off and overall their income will go down by 0.2 per cent.

On the other hand, lone parents will enjoy a 1.3 per cent increase, while an unemployed couple without children will see their income go up by 1.8 per cent.

The IFS also revealed that the Government would not meet its target to halve the rate of child poverty by 2010 - it would miss it by 450,000.

The Tories claimed yesterday that the number of families living in extreme poverty has actually increased since Labour pledged to halve child poverty.

Citing official statistics from the Department for Work and Pensions, they said that

1.8million households were living on less than 40 per cent of the median average national income in 2005/06 - 400,000 more than the 1.4million recorded in 1998/99.

Under the Government's measure, which records children living in households below 60 per cent of average income, numbers of children in poverty have dropped from

3.4million in 1998/99 to 2.8million in 2005/06.

A survey conducted for the Bank of England found that the average household expects 3.3 per cent inflation over the coming 12 months. Most people think prices rose 3.9 per cent over the past year after spiralling costs of fuel, food and petrol.

The official rate of inflation, called the Consumer Prices Index, is far lower than the rates in yesterday's poll, standing at 2.2 per cent. This measure has been criticised because it excludes many housing costs.

STORES FUEL BOOZE STAMPEDE

SUPERMARKETS have been accused of fuelling a 'grotesque' booze stampede ahead of punishing increases in the duty on alcohol.

A national drinking binge is expected over the next three days leading up to the tax rises at midnight on Sunday.

And the stores are doing nothing to discourage the rush.

Hours after Chancellor Darling delivered his Budget, Tesco was promoting 36 cans of Fosters lager for £16 - a cut of 20 per cent.

Sainsbury's began promoting two cases of Strongbow cider and big brand lagers for £16 - a fall of up to 33 per cent.

Cuts of up to 50 per cent have been also unleashed by the likes of Asda and Morrisons on alcopops, spirits and wine.

The Chancellor announced that the duty on beer will go up by 4p a pint, while wine will rise by 3p a glass or 14p a bottle.

He said there will be a 55p rise on a bottle of spirits and 18p on champagne, while smaller increases will be imposed on cider and alcopops.

The latest bargain booze deals appear to fly in the face of promises by retailers to support responsible drinking.

Liberal Democrat MP John Pugh, who has campaigned against the ' irresponsible' promotion of cut-price drinks, condemned the price cuts.

He said: 'The bulk of binge drinking is done by young people who load themselves with supermarket booze. The stores know that, but it appears they are doing nothing about it.

'They are not selling cheap drink by coincidence, they are pushing it. These latest reductions are grotesque, socially irresponsible and absolutely brazen.'

Tesco said: 'These promotions are planned some weeks in advance and aren't a reaction to the Budget.

'It's quite possible that some customers will take the opportunity to stock up ahead of the duty increase, although we're not expecting a huge surge in demand.'