01.10.14
Cameron closes conference with tax cut promises
David Cameron has closed his party’s conference in Birmingham with a pair of tax-cutting pledges aimed at the higher and lower ends of the income spectrum.
He pledged a further increase in the personal allowance for income tax to £12,500 from £10,500 – a direct lift of a Lib Dem pledge – and a rise in the 40p tax threshold to £50,000, which analysts say would benefit the top 15% of taxpayers.
His speech seemed to go down well with the commentariat, with other major sections on the D-Day anniversary, fighting Islamic State, ‘English votes for English laws’, the value of hard work and rising employment, the deficit and £25bn cuts in the first two years of the next Parliament, the Modern Slavery Bill, housing, education, pensions, the NHS, immigration, and a ‘British Bill of Rights’.
Cameron said the personal allowance measure “will take one million more of the lowest paid workers out of income tax – and will give a tax cut to 30 million more. So with us, if you work 30 hours a week on minimum wage, you will pay no income tax at all. Nothing. Zero. Zilch. Lower taxes for our hardworking people…that’s what I call a Britain that everyone is proud to call home.”
Danny Alexander, the Lib Dem chief secretary to the Treasury called it a “shameless attempt to copy Liberal Democrat tax policy”, which the Tories opposed at the last election, and said it should be paid for by the richest, not by more cuts aimed at the working-age poor.
Discussing the 40p tax rate threshold rise, Cameron said: “The 40p tax rate was only supposed to be paid by the most well-off people in our country, but in the past couple of decades, far too many have been dragged into it: teachers, police officers.
“I want to take action that’s long overdue, and bring back some fairness to tax.”
Shadow chancellor Ed Balls said Cameron’s figures were “pie in the sky” and unfunded, and said the party stood up only for a “privileged few”.
Michael Gove MP, the Tory chief whip, said the money for the tax cuts will come from the public spending cuts – but when challenged by the BBC’s Martha Kearney, who said these savings were meant to go on cutting the deficit, Gove said there will also be “proceeds from growth”.
Patrick O’Flynn, Ukip’s economic spokesman, said: “They say that imitation is the sincerest form of flattery and I am delighted that the prime minister has responded so hurriedly to Ukip’s tax-cutting agenda.”
Paul Johnson, director of the Institute for Fiscal Studies, said the two tax cuts together will cost £7bn a year by 2020. Even the personal allowance move doesn’t help the poorest or the lowest earners, he said, as they tend not to be income tax already. Helping them would require an increase in benefits, but the Conservatives have pledged this week to further cut benefits.
Cameron's full speech is here.