Lord Forsyth’s tax report recommends tax cuts of £21bn (BBC) over the course of the next Parliament – apparently to be funded by growth. ConservativeHome publishes the report now – download a pdf here.
This £21bn of relief includes a reduction in the basic income tax rate from 22% to 20% and the lifting of 2.5 million low earners from paying any income tax. The Tax Reform Commission also recommends the abolition of stamp duty on shares (already supported by the Tory Treasury team) and lower business taxation to make the British economy more internationally competitive. If the Commission had its way inheritance tax would also be replaced by a ‘capital gains tax on death’.
Labour’s Ed Balls found the report whilst surfing this afternoon. Apparently it had been premmaturely posted on the
Tax Commission CCHQ website. Mr Balls said that the Tax Commission’s prescription would leave a black hole in the public finances:
"The scale of the tax cuts is huge. The problem is there is no indication here at all as to how it will be paid for. David Cameron has denied he would cut public spending. The hole in the finances that this would create is dangerous for the economy."
Journalists are telling me that Labour are genuinely excited by this opportunity to paint David Cameron as at odds with his own Commission. Yesterday Gordon Brown highlighted the Tory leader’s alleged unfunded promises.
George Osborne has also reacted:
“The Commission have given us a menu of options that merit serious consideration. Some we will accept, some we will modify and others we may reject. But the framework of our tax policy is now set. Sound Money means that stability will always come first before promises of tax cuts. We will not be promising up front, unfunded tax reductions at the next election. We will, however, rebalance our tax system. Green taxes on pollution will rise to pay for reductions in family taxes. This Report sets out some options for doing that. And we will also embark on a major simplification of business taxes that will pay for a significant reduction in our business tax rates. This report represents a major step in that direction. The battle for a simpler, fairer and more competitive tax system has begun.”
Related link from earlier today: Cameron should embrace Forsyth
THIS SUBJECT WILL BE THE LEAD TOPIC ON 18 DOUGHTY STREET TALK TV AT 8PM.