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Tory tax reform plans dismissed Tories 'to be responsible on tax'
(about 4 hours later)
Government ministers say most taxpayers would not benefit from proposals by a Conservative Party policy group for a recommended £21bn a year in tax cuts. Shadow chancellor George Osborne has insisted that the Conservatives will put maintaining economic stability ahead of a £21bn package of tax cuts.
The Tax Reform Commission report is set to say Britain needs a less complex and more competitive tax system. The party's Tax Reform Commission has outlined the package of cuts as part of a simpler, flatter tax system.
The Tories are not bound by its advice and have previously said taxes will be cut only if the economy can afford it. Mr Osborne said some recommendations may be adopted - but not if they put the economy and low mortgages at risk.
The Lib Dems say the Tories are in a muddle, while Labour say tax cuts would be financed by cuts in public spending.The Lib Dems say the Tories are in a muddle, while Labour say tax cuts would be financed by cuts in public spending.
The review was chaired by Conservative peer Lord Forsyth, who said the proposals were realistic and achievable over the course of a Parliament.
The Tories say they will take some ideas but reject others, from the report, which recommends cuts in both personal and business taxes.
Among recommendations in the report, seen by the BBC on Wednesday, is to reduce the basic income tax rate from 22% to 20%.
It recommends raising the earnings threshold, below which people do not pay income tax, from £5,035 to £7,185.
Financial 'hole'
However, Economic Secretary to the Treasury Ed Balls said the "huge" tax cuts would not help ordinary families and would leave a hole in public finance.
These are tax cuts for the few Ed BallsEconomic Secretary to Treasury Back to the old tax row A new approach?These are tax cuts for the few Ed BallsEconomic Secretary to Treasury Back to the old tax row A new approach?
"The problem is there is no indication here at all as to how it will be paid for," he said. "David Cameron has denied he would cut public spending. The review was chaired by Conservative peer Lord Forsyth, who said the proposals, which are not binding on the party, were realistic and achievable over the course of a Parliament.
"The hole in the finances that this would create is dangerous for the economy." Recommendations in the report, due to be officially published on Thursday, include reducing the basic income tax rate from 22% to 20%.
He added: "These are tax cuts for the few. This is the same old Conservative party. It's a party that will take risks with the economy." It also recommends scrapping the 10p starting tax rate and raising tax-free earnings from £5,035 to £7,185 - which it says removes 2.5 million people from the tax system.
The Tax Reform Commission also backs abolishing stamp duty on shares, cutting business taxes and replacing inheritance tax with a "capital gains tax on death" - which would not be levied on family homes. 'Menu of options'
The report also backs abolishing stamp duty on shares, cutting business taxes and replacing inheritance tax with a "capital gains tax on death" - which would not be levied on family homes.
The main corporation tax rate would also be lowered.The main corporation tax rate would also be lowered.
The commission was set up to advise the Conservatives on tax policy, should they win power, but its recommendations are "far from official Tory policy", said BBC economics editor Evan Davis.The commission was set up to advise the Conservatives on tax policy, should they win power, but its recommendations are "far from official Tory policy", said BBC economics editor Evan Davis.
He said the report had not mentioned "green taxes", favoured by Tory leader David Cameron, who has also said he will not promise tax cuts unless they can be paid for.He said the report had not mentioned "green taxes", favoured by Tory leader David Cameron, who has also said he will not promise tax cuts unless they can be paid for.
Shadow Chancellor George Osborne agreed that no "upfront, unfunded tax reductions" would be promised before the next general election. Shadow Chancellor George Osborne told BBC Radio 4's Today on Thursday that no "upfront, unfunded tax reductions" would be promised before the next general election.
HAVE YOUR SAY People are finding it harder to live as taxes go up. Of course it's time for tax cuts Wayne Morris, Port Talbot Send us your commentsHAVE YOUR SAY People are finding it harder to live as taxes go up. Of course it's time for tax cuts Wayne Morris, Port Talbot Send us your comments
"The commission has given us a menu of options that merit serious consideration."The commission has given us a menu of options that merit serious consideration.
"Some we will accept, some we will modify, and others we may reject," he said."Some we will accept, some we will modify, and others we may reject," he said.
He said pollution taxes could pay for reductions in family taxes, and business taxes would be simplified to pay for a drop in business tax rates. He said green taxes could pay for reductions in family taxes, and business taxes would be simplified to pay for a drop in business tax rates.
He said the point he would "hammer and hammer" before the next election was the Conservatives would put economic stability first and that they could be trusted not to put low mortgage rates and inflation at risk.
'A muddle'
However, Economic Secretary to the Treasury Ed Balls said the "huge" tax cuts would not help ordinary families and would leave a hole in public finance.
"The problem is there is no indication here at all as to how it will be paid for," he said. "David Cameron has denied he would cut public spending.
"The hole in the finances that this would create is dangerous for the economy."
He added: "These are tax cuts for the few. This is the same old Conservative party. It's a party that will take risks with the economy."
Lib Dem leader Sir Menzies Campbell also criticised the plans.Lib Dem leader Sir Menzies Campbell also criticised the plans.
"Tory tax plans are in a muddle," he said."Tory tax plans are in a muddle," he said.
"You can't produce plans for £21bn worth of tax cuts without saying how they would be paid for.""You can't produce plans for £21bn worth of tax cuts without saying how they would be paid for."