Brown urged to get tough on inheritance tax

LONDON (Reuters) - A group of Labour MPs and academics has challenged Gordon Brown to get tough on inheritance tax (IHT), calling it a vital tool to reduce social inequalities.

The tax became a key political issue last Autumn when the Conservatives' vote-catching pledge to raise the IHT threshold to one million pounds was seen by many observers as contributing to Brown's decision not to call a general election.

That decision in turn, which allowed his foes to portray him as a ditherer, has been widely identified as the beginning of many of his current political difficulties.

Labour subsequently itself doubled the threshold for death duties to 600,000 pounds.

The Labour group said in its letter in the Guardian: "Progressives must react to prevent any further inheritance tax reductions which again prioritise the richest over the poorest in our society.

"Inheritance tax matters because it is one of the few tools which directly reduces inherited inequalities.

"Those arguing against it must know they will entrench social immobility."

Among the letter's signatories are the Labour chairman of the work and pensions select committee, Terry Rooney, TUC General Secretary Brendan Barber and MPs Clare Short and Fiona Mactaggart.

The letter said the idea that IHT was an unfair tax that large swathes of the population have to pay was false and that for the past few years only around 5.4 percent of estates were affected.