TaxAdministrationLetwin attacks Labour over tax

Letwin attacks Labour over tax

Shadow chancellor Oliver Letwin has sought to divert attention from reports that Conservative leaders are in disarray over tax cuts by highlighting forecasts that a Labour government will have to increase taxation.

Link: UK economy predicted to ‘hit a wall’ in 2006

Letwin issued a statement claiming that the predictions by Ernst & Young’s Independent Treasury Economic Model (ITEM) Club had confirmed that ‘almost all serious economic forecasters now agree that taxes will have to rise if Labour wins another term’.

‘This latest report highlights the question that lies at the heart of this election, and which Tony Blair and his chancellor have failed to answer – which taxes will they put up to fill the £8bn shortfall in their plans?’, Letwin said.

‘Voters face a clear choice at the election: more waste and higher taxes under Blair, or value-for-money and lower taxes under the Conservatives.’

The dispute is over whether the money should be spread over a number of token reductions or concentrated on one or two, and whether these should reward middle-class Tory voters or demonstrate that the Conservatives are returning to their ‘One Nation’ roots by raising personal allowances to remove the poorest from paying taxes at all.

Senor Tories have proposed cuts ranging from inheritance tax or capital gains tax ‘reforms’, serious reductions in council tax or a reduction in income tax rates.

His comments followed reports that party leaders remain undecided on how to make the £4bn-worth of tax cuts planned in its £35bn savings package. It has been speculated that Letwin’s strategy so far has been to refuse to tie his hand ahead of the next Budget for fear that Chancellor Gordon Brown will use his proposals.

There is also a serious argument also between those who want to use specific tax pledges to attract particular voters, those who want to use them to present a reformist face by directing cuts at the ‘needy’ and those who believe it better to have an open-ended promise attracting all those who want any form of tax cuts.

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