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Last Updated: Sunday, 20 August 2006, 13:19 GMT 14:19 UK
Byers wants inheritance tax ended
A row of terraced houses

Former cabinet minister Stephen Byers has called for inheritance tax to be scrapped, calling it "a penalty on hard work, thrift and enterprise".

He told the Sunday Telegraph abolishing the tax would show middle class Labour voters they had not been forgotten.

The Conservatives accused Mr Byers - a close ally of Prime Minister Tony Blair - of "scoring points" off Gordon Brown.

The Treasury insisted that inheritance tax was "fair and necessary" and only affected the top 6% of estates.

Mr Byers, who resigned as transport secretary in 2002 after a series of controversies, denied that he was attacking the chancellor.

He said he was "not bothered" about personality issues and was just trying to raise policy issues.

I don't think this proposal has much support
Treasury spokesman

He warned that soaring house prices threatened to bring millions more within the scope of inheritance tax, which was designed to target the very wealthy rather than ordinary families.

"We know that Tony Blair will stand down at some stage before the next election," he wrote in the Sunday Telegraph.

"The danger for Labour in electoral terms has always been that when he departs from Downing Street voters will feel that the pragmatic and modernising approach of New Labour has gone with him."

'Fair and necessary'

But a Treasury spokesperson said: "Inheritance tax is a fair and necessary means of raising revenue for public services, and only affects the top 6% of all estates.

Stephen Byers
The challenge for (Mr Blair's) successor is to demonstrate...they are in touch with the British people
Stephen Byers

"Anyone who wants to abolish it needs to explain exactly how they plan to fund the 3.6bn cost - the equivalent to more than 1p on income tax, or 18p on petrol duty, and almost double what we are spending this year on counter-terrorism and security."

Trade and Industry Secretary Alistair Darling, an ally of Chancellor Gordon Brown, said Mr Byers' stance "may make for a headline, but it doesn't make for a prudent and sensible tax-and-spend policy".

He told BBC News: "I don't think this proposal has much support across the political spectrum. The Tories and the Liberals have looked at it and they have backed off it."

BBC political correspondent Laura Kuenssberg said Mr Byers was one of the prime minister's staunchest supporters with a reputation for being an "outrider" - an uber-Blairite who floats ideas that might be considered an anathema to traditional Labour supporters.

It is unlikely Mr Brown will scrap a tax that brings in three billion pounds in revenue so Mr Byers' suggestion will be interpreted by in the Westminster village as a dig at him as much as a concrete idea to change a policy, she said.

Threshold increase

Inheritance tax affects estates which are valued at more than 285,000 - but the government intends to further increase the threshold to 325,000 by 2010.

The number of people who have been forced to pay inheritance tax has more than doubled since 1997, leading to charges that the government has used it as a stealth tax.

Some 37,000 paid the tax last year, up from 18,000 in the year Labour came to power, according to government figures.

A Treasury spokesman has also said 94% of estates would pay "no inheritance tax whatsoever" as a result of the government's planned adjustment of the threshold.

A lobby group that campaigns for lower taxes said Mr Byers "is right".

Director of the Taxpayers' Alliance, James Frayne, said: "Inheritance tax is unfair and it is starting to hit more and more ordinary families across the country, rather than the rich who have the funds to come up with ways of avoiding it.

"Unless the leadership of all the main parties commit themselves to abolishing it as part of a programme to ease the tax burden they are going to find themselves increasingly out of touch with voters."


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