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"[Balls] believes the Tories have made a big error after abandoning plans to match Labour spending commitments as Cameron makes clear he would like to reverse three big tax changes – the 50p top rate, due to be introduced next April; the 0.5% increase in national insurance contributions, due to be introduced in April 2011; and the changes in pensions tax relief.
'Add those together and that is a £10bn tax gap for the Tories. George Osborne said he wants to get the deficit down faster than us. He has to got to find £10bn of spending cuts every year simply to match Alistair Darling's plan.'"
Now, Balls's claim is disingenous. As the 50p tax controversy demonstrated, the Treasury's forecasts don't tend to fully account for the revenue-losing aspects of tax hikes - so that "£10bn tax gap" is probably nothing of the sort. And, besides, the signs are that the Tories will keep some of those "three big tax changes" anyway.
But it does rather support the idea that Labour are going to try to shift the debate about deficit reduction away from spending cuts and on to tax rises. As I said a few days ago, the Tories should ready themselves for this coming battle.