Cameron Takes Tax Cuts Off UK Tory Agenda

by Robert Lee, Tax-News.com, London

29 July 2009

UK Conservative Party leader David Cameron has dampened hopes that he will be able to cut taxes in the first few years of a Tory government.

Speaking on the BBC’s Andrew Marr Show on July 26, Cameron said that, if elected to government next year, his party’s first priority will be restoring order to the public finances, which have been decimated by heavy borrowing and plunging tax revenues. This would mean that public spending would have to be cut, and that some taxes may even have to rise, before tax cuts could be considered, he signaled.

Cameron indicated that the wealthy would have to "pay their fair share" towards the cost of repairing the fiscal breach, and highlighted areas in the tax and benefits system where relatively painless savings could be made, for example, by curtailing entitlement to tax credits for those on higher incomes.

"Tax credits we support. We think they are a good idea to get payments to working families on low incomes. But they do go to families who earn over GBP50,000, so we have to look at that," he said.

Cameron also appears in no hurry to abolish the new 50% rate of income tax, to be charged on incomes of more than GBP150,000 per year from next April, despite his initial hostility to the announcement in the April 2009 budget. While Cameron still thinks the idea is "bad" tax policy, it is not on the Tories’ list of "things that we can get rid of quickly," he remarked.

Cameron has been careful not to commit the party to any concrete tax and spending plans, but he was also vague on the prospects of introducing the one tax cut proposal the Tories have been specific on, that of raising the inheritance tax threshold, currently GBP325,000, to GBP1m. While he described this as a "promise" that the party intends to deliver on, he gave no specific timeframe for its implementation, saying only that it would be introduced "in a parliament," which could last until 2015.

"We've been very clear we can't promise tax reductions, we can't rule out tax increases,” Cameron explained. "We've never done that because we genuinely believe that you've got, as a country, to live within your means."

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