David Cameron hints at tax cuts after 2015
The Prime Minister said he wanted to âgive people back some of their hard-earned moneyâ â the strongest hint yet that his party will pledge to cut taxes ahead of the 2015 poll.
His remarks came after Chancellor George Osborne claimed the UK governmentâs deficit reduction plans can be achieved without further tax rises following the vote in two years.
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Hide AdMr Cameron appeared to go a step further yesterday, insisting he is a âlow-tax Conservativeâ and said that reducing taxation levels was what âdrivesâ him as a politician.
But a leading economist claimed last night that the move was ânot tenableâ and would lead to âbigger spending cutsâ in the next parliament.
The coalition government has refused to reduce the basic rate of income tax, with Mr Cameron saying earlier this year that âtax cuts donât completely pay for themselvesâ.
However, as part of a wide-ranging interview and in an apparent policy shift, the Prime Minister suggested yesterday that an economic recovery could fund tax cuts in the next parliament.
He said: âI think your economy does better if you say to people, âYouâve worked hard, youâve done the right thing, here is some of your own money back in a tax reductionâ.â
He added: âIâm a low-tax Conservative. I think as we start to see the economy healing â and it is healing; as we start to see the economy grow stronger â and it is growing stronger; as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes. That is what drives me as a Conservative.â
But Professor John McLaren, an economist with the Centre for Public Policy for Regions, warned that tax cuts would lead to a âsecond wave of bigger cutsâ on a more severe scale than the past few years.
He said: âIf you lower taxes then you have to find even bigger spending cuts, which have already been incredibly large. Reducing tax would mean there was a second wave of bigger cuts. If any taxes fall itâs likely to be a small symbolic thing in one area and a switch to another area. We already have big cuts of 3 per cent built in for 2016-17.
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Hide AdâReducing taxes would mean that cuts would be larger on average than what weâve seen in the lead-up to 2016-17. Itâs not tenable to have significant tax cuts and keep the same spending profile. â
The Prime Minister said he believed securing an outright Conservative majority in 2015 was an achievable goal as he âšappeared to attempt to distance himself from his coalition partners.
Mr Cameron, who has attempted to placate Eurosceptic Tory back-benchers with a promise of a referendum on membership of the European Union by the end of 2017, said he would be âmore liberatedâ without Nick Cleggâs Lib Dems.
He said: âIâm aiming for victory and Iâm going to fight all out for victory, and I think victory is achievable if we really roll up our sleeves and deliver.â
A Lib Dem coalition source said: âFor the next election all parties will be setting out their tax and spending plans. The Liberal Democrats have different tax priorities from the Conservatives.
âFor example, the Deputy Prime Minister [Nick Clegg] has said that there should be tax rises for people at the very top, such as through a mansion tax.â
Labour MP Willie Bain said Mr Cameron would only pursue tax cuts for top earners while imposing cuts to public services. He said: âDavid Cameron has already given a tax cut: to his millionaire cabinet colleagues and Tory donors. Despite all the attempts to âšrebrand his party, we know that itâs the same old Tories.â