New Labour's first income tax rise since

Well, since when actually?

Since the last budget actually. Everyone seems to have missed this most basic point.

The new higher rate of tax - the first income tax increase in decades - will raise £670m a year.

This isn't true I'm afraid. Even the first income tax rate rise wouldn't be true giuven the abolition of the 10p tax band, but let's leave that aside.

But, I hear the assembled masses cry, income tax rates have not been raised by New Labour, have they? So therefore income tax hasn't risen, has it? QED.

Well, that's to ignore what has been done to the tax bands and the personal allowance over the years. It's a basic truism of this liberal capitalism thing that incomes rise faster than prices over the years. Yes, like the coming year (in all likelihood) there are interruptions, but real incomes, decade by decade, go up by 1 or 2% a year.

Which means that if you want income tax to stay the same then you've got to raise (I'll stick with just the personal allowance if you don't mind) the tax free allowance every year not by inflation, but by the increase in real wages. That's to keep the system just static you understand.

And have they been doing this? No, they most certainly have not. The personal allowance has never, in the New Labour years, been raised by the increase in wages. Only ever by the rise in prices....and not even that in at least one case when it was frozen. This is sufficiently well known that it has a posh name, "fiscal drag".

It's also a deeply cynical manipulation of the money illusion, that problem that we humans have with the difference between nominal and real amounts.

Not only cynical of course: it's what leads to the absurdity at the heart of our taxation system, that someone working part time on the minimum wage has to pay income tax.

This isn't the first income tax increase in deacdes, far from it. Income tax has been raised, through not raising the personal allowance to account for wage growth, each and every year since 1997.

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