Tories move closer to formally proposing tax cuts

David Cameron is being urged to put tax cuts in the next Tory manifesto by a
tax commission set up by shadow chancellor George Osborne.

Former Thatcherite cabinet minister Michael Forsyth has been drawing up
proposals for tax changes for the Tory Tax Commission, and is to propose a
‘menu’ of tax cuts, according to reports.

To date, Cameron and Osborne have resisted specific pledges of tax cuts,
however the Conservative leader is set next month to endorse the general thrust
of the policy paper drawn up by the ex-Scottish Secretary.

Lord Forsyth of Drumlean’s tax cut ideas – aimed at business and middle and
lower income earners – will put Cameron on the spot over the issue when it is
published shortly after the Conservative Conference in Bournemouth at the
beginning of next month.

But following growing pressure from the Tory right – including a report
submitted last week by another Thatcherite former cabinet minister John Redwood
claiming that cutting business taxes would stimulate economic growth paving the
way for income tax cuts – the Conservative leader is ready to make concessions.

Lord Forsyth’s report will place heavy emphasis on ‘lower tax rate on effort
and savings – that means lowering company taxes and all levels of income tax.’

One of the key proposals is taking the poorest out of the 20p in the pound
tax band and those on middle incomes out of the 40p tax band.

It will also call for the abolition of a number of perks, allowances and
reliefs for the wealthy and the move towards more “green” taxes to allow
reductions in the burden elsewhere.

Senior Tory sources said Cameron was ready to give a warm welcome to the
report – which is considered ‘detailed and impressive’ – when it is published in
October, but he will not make any concrete proposals until closer to an
election.

One source said: ‘Michael Forsyth will give us the menu, but we won’t say
what meal we will order from it until much closer to the next election.’