Angry about the tax rises in this week's Budget? Make sure you take advantage of the myriad tax and benefit opportunities announced by the chancellor. Gordon Brown's predilection for fiscal tinkering continues unabated, turning Britain into a nation of benefit claimants needing a bewildering array of incentives to encourage "good behaviour" and discourage sin.

Take the new means-tested tax credits to be introduced next April. Child tax credit of £10.45 a week will be paid to all families with up to £50,000 a year in income. Above that level, it will be withdrawn gradually until it disappears at £58,000 a year - only 10 per cent of families will thus fail to qualify.

Designing a means-tested benefit to reach 90 per cent of families is ludicrous. It extends the palaver of means-testing to well-off households, which can lose almost 48p for each extra pound earned as the tax credit is withdrawn. Families between £50,000 and £58,000 a year will face a higher tax rate than someone on £100,000 a year. It would be far more efficient to increase child benefit for all families and use the tax system to claw the extra back from the richest.

But the growth of means-testing does not end with families. Childless couples will also qualify for the first time for a working tax credit. And pensioners are to have their own tax credit to top up their retirement income.

A large proportion of the households in one of the world's richest countries will soon be filling in forms to claim means-tested benefits that should be used only to help the very poorest. Almost 1½m of the households receiving the two new tax credits will effectively pay tax at over 60 per cent as their income rises and credits are withdrawn.

Claiming these tax credits will generate enormous bureaucracy. Many will decide not to bother with filling in lengthy forms delving into their financial affairs.

Other tax announcements on Wednesday continue Mr Brown's approach of introducing ever-more intrusive tax changes. This year, bingo is due to have the burden of betting tax lifted. Alcopops will rise 11p a bottle, but a pint of real ale from a local microbrewery will attract 14p less duty. A low-polluting car will save its owner £30 in vehicle excise duty, while the cost of electricity will fall if generated from coalmine methane.

Meanwhile, the self-employed need to think about forming a limited company making less than £10,000-a-year profit which will then be tax-free. If they can turn themselves into a "community amateur sports club", there will be further tax breaks. Tax planning is becoming more profitable than doing more business.

Mr Brown's fiscal measures betray more than just his obsession with micro-managing the economy. They give a revealing insight into his view of modern Britain. The chancellor sees the UK as a country so impoverished that even families in the top fifth of the income distribution need social security benefits. The rest need tax breaks for their beer and bingo, paid for by taxes on the large cars they foolishly insist on buying.

Such a view is, of course, a caricature. Yet it has serious consequences for the country by distorting incentives and introducing needless complexity.

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Special report: Budget 2002

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