Walking down Whitehall in the sunshine yesterday, out of a high window in the Treasury wafted down a document, fluttering slightly in the sharp north wind. "Good heavens!" I cried. "It's a draft of the Budget!" There it was, today's Budget! A scoop!

It opens with a scribbled note: "Start with usual: economy slowed but we're still better off than the yanks, krauts, frogs, nips etc... Borrowing may be up, but it's still less than yanks', frogs', krauts', nips' etc. Still hell of a lot less borrowing than profligate Tories. Am prudent ant who saved in good times for this recession, while grasshoppers didn't - yanks, krauts, etc, etc. War is over, market is live cat bouncing, all will be well... Now for serious message about tax and spend."

The next part is printed out as follows: "In the last six years, this government has met virtually all its pledges, hit its targets and achieved extraordinary success. We have the highest employment, lowest inflation and lowest interest rates for 50 years. The biggest increase ever is being spent on schools, hospitals, police and child poverty - and already there are pretty good results: exam results up annually, shortest hospital waiting times ever, crime down by 9% this year and more to come each year as cash cascades in.

"This week you will feel the effect of the 1p rise in national insurance in your pay packets. As you know, every penny of that is spent on a health service that has struggled through 25 years of gross underfunding. Indeed it was underfunded from its first day, when Clement Attlee at the last minute cut back Aneurin Bevan's modest cost estimates. But no more. From now on it will improve in standard year after year until all critics are confounded, all cynics persuaded that the state delivers the best service at the best value: we shall not bother to mimic Tory plans for semi-privatisation. So there will be no more PFIs or foundation hospitals.

"But today I am going to be brutally honest. We have made progress - but not enough. We underestimated how great the need was. We did not know that transport was collapsing from neglect or how much more public servants must be paid to recruit and retain them. Shortage of pathology staff on only £16,000 a year brings hospitals to a halt. In schools, we underestimated sums needed for teachers' and assistants' pay and pensions - with bills up by 13%, some schools are now laying off staff just as we need more. I could go on. I will hear no nonsense about money 'wasted' on pay: public services are made of people and good pay means high standards, from cleaners to consultants. Every public service suffers from 25 years of decay. Yet I want dazzling public places, public art and buildings, landmarks to celebrate common values.

"Now, I come to our great disappointment - and this is where citizens must decide what kind of society they want. After six years of redistributing more money than ever before into the pockets of poor families, the gap between rich and poor is still widening. Social progress steadily narrowed that gap until 1978 but since then social justice has gone into reverse. I find that shocking and unacceptable for a Labour government.

"At this rate, we can never reach our historic target to end child poverty. Half-a-million fewer children are poor than in 1997 - but far more needs to be spent this year and next to hit the quarter-way target. It is time to be honest. Abolishing poverty needs public will to make it happen, and a great public willingness to pay for it.

"Tax is called a 'burden' - though we pay less than most countries (and we have plenty of social scars to prove it). When the same Tory press that pillories public services explodes over a modest 1p rise in national insurance, we have blenched. But today I want to stop apologising and praise the value of taxation. It is what binds us together. It buys us things we prize above all others - health, education, security, a financial safety net, an environment worth living in and a cohesive community where none fall too far behind. It could, if you wish, provide universal child care in spectacular children's centres so parents never need worry again - for another mere 1p on national insurance.

In the last 10 years the country got 30% richer - but was it well spent? Are we 30% happier? Or could the next 30% of new wealth be spent better? The Tories say you spend your own money better - buy that sports utility vehicle, that extra holiday. Let the social fabric descend into squalor. Let schools and hospitals fester, crime soar and poverty shame you.

That's your choice. Pollsters terrify politicians with iron laws: the public never votes for more tax. So politicians pretend people can have everything for nothing, but voters know it's a lie. So it's time for the truth. I now think enough voters do trust us to spend their money well. We will be returned at the next election even if we take more tax from those with the broadest shoulders.

So this is how my new taxes will fall. I will remove the ceiling on national insurance: currently for no good reason people pay 11% on earnings up to £31,000, but only 1% thereafter. This is upside down, the poorest paying most. Keeping the rate at 11% all the way up the income scale will bring in £8bn.

The Fabian Society report shows inheritance tax is almost defunct, evaded by the richest giving away money before death, so I shall levy tax on all gifts over £1,000 whenever given. I will also levy capital gains tax on homes, with the double purpose of deflating the housing market and encouraging more productive investment than bricks and mortar. Those earning over £100,000 will pay 50% income tax, bringing in £3.3bn. Since top tax rates stood at 60% for nine years of Mrs Thatcher's rule, I shall dare to match her and levy 60% from earnings over £120,000, bringing in £6bn.

"None of this will touch most people. Median income is only £21,000, so half the population earns less than that. When the Tory press pretends this will hit middle England, remember none of these measures will touch 70% of the population. Who is middle England? Out of 10 earnings bands, let us assume 'middle' is those in the fourth, fifth and sixth deciles where a couple with two children earns only between £17,900 and £27,300. So frankly, my dear, if I squeeze the top 30 % just a little more, I don't give a damn - as they are nearly all Tories anyway."

(Margin note: "You can't say that!" Another hand writes: "Oh, all right. Say this then: 'I know higher earners will feel the greatest weight of these increase. But I trust you agree that in this ever richer society, the broadest shoulders can afford it.'")

"And so, Mr Speaker, I commend to you a Budget that will at last deliver the social democratic future for which people voted overwhelmingly in the last two elections."

I should warn you that this document has the usual caveat, "Check against delivery", in case the chancellor deviates from this text.

· p.toynbee@guardian.co.uk