While talking about his party manifesto, Conservative leader Michael Howard admitted yesterday that the overall tax burden would increase under his party’s government. His statement made in an interview on GMTV, was in contrast to his party’s main election promise of cutting taxes by £4bn.
Mr. Howard explained that although his party wished to undo all the damage that Labour had done during the last 8 years, tax which is a proportion of national income, would rise. He said he still stood by his party’s commitment to £4bn of tax cuts in his first budget, but circumstances after that might force him to raise taxes in subsequent budgets.
He also said that he would be unable to reverse the 66 tax rises which his party accused Labour of levying.
He justified the turnabout saying “We will bring about a growing economy. And in a growing economy the tax burden goes up.”
Most economists will agree with Mr. Howard’s statement about the economy: As the economy grows, more people, as a consequence, would come in the higher income tax bands.
The Conservatives would limit public spending to £665bn annually by 2012, which is £33.5bn less than Labour. “If all goes well, we will be able to keep our promise without having to increase taxes.” Mr. Howard said.
Meanwhile, Labour MPs have been making similar promises and accusations. They too, as expressed by chancellor Gordon Brown, have refused to rule out tax rises - particularly national insurance contributions.
Mr. Howard pointed out that Labour had made similar promises during their campaign but after the election, Mr. Brown had increased national insurance and was likely to use the same tactic this time round.
The Tory leader took the opportunity to attack Labour saying that if they were reelected they were bound to increase national insurance contributions. However, he said nothing about how and whether his party would leave the NICs unchanged.
He also admitted that his flagship health policy "Right to Choose" would take away about £1.2bn from the NHS which it would have to pay towards half the costs of certain operations in the private sector. This setback too was justified “if people have paid their taxes and towards the cost of their NHS treatment, it’s right and fair for the NHS to pay a cost.” the Tory leader said.
In a separate meeting, the Conservatives yesterday announced plans to cut stamp duty. They promised that over 80% of home purchases would escape stamp duty as they would raise the tax-exempt threshold to £250,000. Accordingly, every year, about 500,000 home buyers would pay no stamp duty; which meant a house buyer could save about £1,800 on a house with the average price of £180,500. Labour leader Gordon Brown had earlier promised to raise threshold to £120 pales.
Posted
on : Sat, 23 Apr 2005 00:00 GMT | Mortgages News
By : Pippa Fielding
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