Allister Heath

Cameron will hate his own tax inquiry

The Tory tax commission under Lord Forsyth has not stuck to the cautious Cameron script, Allister Heath reveals. An almighty row is now brewing

issue 23 September 2006

It was fun for David Cameron while it lasted but the Conservative party’s uneasy moratorium on talking about tax cuts is about to come to an abrupt end. The Tory Tax Reform Commission, launched by his predecessor Michael Howard, will shortly deliver its findings — and the prospect is causing panic in the party’s Victoria Street headquarters.

Far from being the modest simplification of the tax code that the Cameroons had hoped for, I have learnt from senior sources that the current draft report includes a blueprint worth up to £19.5 billion a year in net tax cuts to be implemented over the course of a first Tory term, as well as a number of additional uncosted tax reductions. I can also reveal that shadow chancellor George Osborne is fighting a rearguard action to convince the Commission’s excellent chairman, Lord Forsyth of Drumlean, to dilute his plans; while not binding on Cameron, they will be taken seriously by the media and opposition.

The implicit threat from Tory HQ is that the report will be buried if it is too radical; in a crucial meeting with his commissioners on Thursday, Forsyth will have to decide how much, if anything, he is prepared to concede. The report is to be sent to the printers next week and launched at KPMG on 19 October.

The draft report amounts to the most radical detailed tax proposals to have been produced by any official Conservative party-commissioned group for at least a decade. The existing 150-page draft will probably expand to between 180 and 200 pages through the addition of extra calculations. Its 40 proposals include cutting the basic rate of income tax from 22 per cent to 20 per cent, slashing corporation tax from 30 per cent to 25 per cent (and eventually to 20 per cent) and scrapping the 10 per cent starting rate of income tax.

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