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Budget predictions: National insurance and VAT set to rise?
Sunday's papers have focussed on National Insurance and VAT as likely sources of extra Treasury revenue in this Wednesday's Budget.
Quotes from "Treasury sources", "government sources" and anonymous "ministers loyal to Tony Blair" all indicate that tax rises will be announced later this week.
According to sources quoted in the Observer, there will be an extra £5 billion in taxes, with the introduction largely delayed until 2004 to "sweeten the pill".
The rise is likely to come in the shape of a significant rise in, or even abolition of, the £29,900 ceiling on National Insurance (NI) contributions.
The paper predicts that the NHS is set for a £10 billion cash injection - seeing a budget rise of least seven per cent over inflation.
The Sunday Times puts the tax hike higher - at £7 billion, the equivalent of a three pence rise in income tax - over the next two to three years.
Government sources told the paper that meeting Blair's aim of having the "best health service in Europe" could not be met without raising taxes.
The paper says a NI rise of one per cent is one the cards, along with a rise in the ceiling on contributions.
Personal tax allowances are also likely to be squeezed, says the Sunday Times.
An additional possibility is raised in the Sunday Telegraph, which speculates on a one point increase in VAT, to 18.5 per cent.
But the paper is again predicting a one per cent rise in the NI rate and higher thresholds, which could cost higher earners £640 a year more.
Most of the cash will go straight to the NHS, but will be coupled with reforms to raise standards.
The Mail on Sunday also says a £5 billion boost from National Insurance is on the cards, along with a 0.5 per cent rise in VAT.
Treasury officials told the paper that Gordon Brown has no intention of dropping plans for higher NI rates despite public sector finances performing better than expected.
The News of the World suggest the chancellor will seek a £7.5 billion a year tax hike, with £5 billion coming from NI contributions.
However, the paper says that while £2.5 billion of extra funding will go to the health service, more than £5 billion will be used to fund a renewed anti-poverty drive focussed on the low-paid and families.
The Independent on Sunday also looks to NI increases to pay for a large rise in health spending, but reports on ministerial jitters about the strategy.
"Some of us who are Blairites didn't come in to return Labour to the tax-and-spend party. This is a defining moment for new Labour and it is very dangerous for us," one minister is quoted as saying.
While history indicates that pre-Budget spinning has often aimed to "soften up" the public ahead of less drastic announcements on Budget day, this time Brown and Blair are prepared to explicitly argue the case for higher taxes to pay for more spending.
The papers are broadly in agreement that middle income earners and the better off should expect to pay more tax as a result of the announcements Gordon Brown will make on Wednesday.
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