No promise to cut taxes

Shadow Chancellor Oliver has refused to promise lower taxation but named five taxes the Conservatives believe need reforming. Political Editor Graham Dines reports from the first day of the Tory Party conference in Bournemouth.

YESTERDAY the Conservatives set out on a bizarre path towards the next General Election. They claimed Britain was overtaxed and that Labour had hit us with 66 new taxes since 1997 - but refused to give any detail to Tory tax plans because the voters would not believe them.

Shadow Chancellor Oliver Letwin made an impassioned speech about thinning down fat government and reducing the tax burden.

It was mercifully short. He spoke without a prepared text. But just whom he was talking to was never made clear.

It certainly wasn't those surveyed for yesterday's Daily Telegraph by the polling organisation YouGov, which had found that 37% of floating voters wanted a “firm and unambiguous” promise from the Tories to cut taxes.

If any of those questioned had listened to Oliver Letwin yesterday, they would have been deeply disappointed.

He refused to take the bait because, he said, no one would believe the Tories if they did announce a commitment to slash taxation.

“There have been too many broken promises on tax from too many politicians. Everybody knows what happened when Tony Blair that he had no plans to increase taxes at all - and then raised taxes 66 times by stealth.

“So no more broken promises on tax.”

But it seems all the nation's ills are going to be solved and the public services financed by a wholesale purge of the civil service. Departments will be axed, as Whitehall is laid to waste to divert taxes away from salaries of the bureaucrats into hospitals and schools.

“By thinning down fat government and getting money to the front line where it belongs, we will give the taxpayers something they have not had for seven years. We will give taxpayers value for money.”

Value for money, yes. Lower taxes, no - or not yet at least because, no one will believe the Tories if they make such a promise.

“By thinning down fat government, we can stick to my spending controls and yet fund public services properly,” claimed Mr Letwin.

“Thinning down fat government is not merely an option but a moral necessity for the next Conservative government. It is the route to making Britain's tax system simpler and fairer.

Tomorrow > he will set out his argument even further. In a lecture to the Centre for Policy Studies, the Shadow Chancellor will claim the Government is not giving value for money.

He will brand “a disgrace” that there are more civil servants in Britain than people who live in Sheffield, and more bureaucrats in the Department of Work and Pensions than soldiers in the Army.

“If the Government isn't giving taxpayers value for money. . . it is a moral outrage.”

Yet simply pledging to freeze civil service recruitment on the first day of a Conservative government and slimming down “Britain's fat and bloated bureaucracy” seem to fall far short of setting Britain on the Tories' virtuous “path to a lower tax economy.”

Presumably, as the taxpayer will have to pick up the tab for redundancy payments and all the monthly cheques that will have to be paid to tens of thousands of civil servants whose services will be dispensed with by the Tories, the amount of cash for schools and hospitals may not be all that great after all.

THE TAXES TO BE REVIEWED BY THE TORIES

OLIVER Letwin yesterday set out five taxes that he branded unfair. But there was no specific commitment to reform any of them.

All the Conservatives would promise was the publication of a series of consultation papers containing costed options.

“We will seek views from all interested parties, to open a public debate on the path towards what we intend to achieve - a fairer and simpler tax system.”

Council tax: Since 1997, the average Band D property bill has increased by 70% If it continues at its present rate under a third term Labour government, a typical household will be paying £2,000 in 2009-10.

Inheritance tax: A million homes have become liable to inheritance tax, which has a current threshold of £263,000. Many of these are former council houses, bought under Margaret Thatcher's “right to buy” policy of the 1980s. In 1997, Gerrards Cross in Buckinghamshire was the only town in Britain that had an average house price above the threshold - today there are 86.

Stamp duty: In May 1997, purchasing a house of average value would incur stamp duty of £680. In August this year, the same purchase would lead to a bill of £1,606. A property sold for £249,999 is subject to 1% or £2,500 duty whereas a home selling for £250,001 is subject to 3% of £7,500 duty.#

Taxation: People on the “modest” national average income of £25,170 pay a combined income tax and employee National Insurance contribution marginal tax rate of 33%. The number of people paying the top income tax rate of 40% has increased by half since 1997 because thresholds have not increased with the rate of inflation.

Savings and pensions: The abolition of advanced corporation tax for tax-exempt shareholders has “robbed” pension funds of £5bn annually, and brought the UK to the brink of a pension “crisis.”