Shame on your tax sham, Mr Brown

Just who do you think you are kidding, Mr Brown? In last week's Budget you promised to lift the threshold on inheritance tax (IHT) from £263,000 to £300,000 over the next three years, a nice chunky-sounding rise.

In the short term it may even help people. While the IHT threshold will rise by about 4 per cent a year, the Halifax bank thinks house prices will fall by 2 per cent this year, then rise by between 2 and 3 per cent over the next two years. Martin Ellis, its chief economist, calculates that by 2008 some 1.9 million houses in Britain will be equivalent in value to the £263,000 IHT threshold, compared to 2.4 million now.

But compare this to when Labour took power in 1997: just half a million houses were worth more than the then IHT threshold.

When you took over as Chancellor, 4 per cent of estates were subject to IHT. Accountancy firm Grant Thornton calculates that the threshold would have to rise to £515,000 to reduce the percentage of estates liable for tax to this level again.

Last year you said the figure had risen to just 5 per cent and this year, in a clever switch of words, this became '94 per cent of estates will pay no tax'.

But if you deduct those estates where a spouse survives - and therefore no IHT is payable - the percentage actually rises to 10 per cent.

While raising the threshold a little bit will help a few people, particularly those with homes in the Labour heartlands of the north of England, to escape the tax trap, what about those who still have to pay?

IHT was meant to be a tax on the rich. It obviously no longer is. You charge a whopping 40 per cent on everything above the threshold. Even the left-wing think-tank the Institute of Public Policy Research, believes tiered rates would be fairer on those with less money. As your predecessor, Kenneth Clarke, said in his last Budget, IHT 'is largely paid by people of modest means who either cannot, or simply do not, make careful plans to avoid it'.

The rich pay for good accountancy advice so their beneficiaries don't have to pay this tax.

Just consider the kind of people who will still be trapped by it, many of them traditional Labour voters:

· single parents whose children will have to pay tax on anything above the threshold;

· carers who have moved in with their elderly parents to look after them;

· unmarried heterosexual couples who won't have the same tax exemptions as married and gay couples.

And think about the stress this causes grieving relatives who have to pay IHT before they can access the assets. How inefficient and downright cruel is that?

Inheritance tax is a penalty on thrift, independence and enterprise - all things you profess to support.

The changes you have set out are almost meaningless. Worse still, they indicate you won't do anything more about this iniquitous situation for the next three years. Shame on you.

· 'The Observer Guide to Inheritance Tax', sponsored by Towry Law, is available free. Just call 0845 0500 116.