Government accused of using "stealth tax"

Date: 30th January 2008

New statistics have revealed that nearly 3.7 million UK people are now paying income tax at the highest level of 40 per cent.

According to the Telegraph, this figure has increased from approximately two million in 1997, because tax thresholds have risen in accordance with inflation instead of wages.

This process is known as "fiscal drag" and means that the number of people paying the higher band of income tax has risen by 20 per cent in the past five years, the newspaper reports.

Shadow chief secretary to the Treasury Philip Hammond said that findings represented "yet another example of the stealth tax approach that [Gordon Brown] has consistently adopted since his pensions raid in 1997".

The Taxpayers' Alliance states that fiscal drag has enabled Mr Brown to increase income to the Treasury by about £80 million since he was appointed chancellor.

However, a recent study by the Trades Union Congress has found that the Treasury loses out on approximately £13 billion in taxation due to evasion from the super-rich members of society.