David Cameron has held out the prospect that the tax cuts he announced at his party’s conference earlier this week could be implemented shortly after the next election.
The prime minister, speaking during his trip to Cyprus and Afghanistan, indicated that the first moves could happen before the deficit is wiped out in 2017-18 and even as early as the first budget after the country goes to the polls in May.
There had been an expectation that the £7bn tax cuts Cameron announced in Birmingham on Wednesday, including raising the 40p threshold to £50,000, might not occur until there is no longer a budget deficit, or even until the final year of the parliament.
But speaking to reporters in Kabul Cameron said: “I think what we’ve shown in the last parliament is that it’s perfectly possible, if you manage the nation’s finances wisely, to deliver tax reductions at the same time as making savings and efficiencies.
“So in the last parliament we had to make something like £100bn of [spending] cuts but at the same time as that we actually made tax cuts in terms of the personal allowance of £9bn so in a parliament.”
Labour has attacked the tax cuts set out in Cameron’s conference speech since they are not funded by any tax rises or specific spending cuts. The Tory Treasury team has said raising the personal allowance at which income tax first starts being paid from £10,500 today to £12,500 by 2020 would cost £6bn. Lifting the 40p threshold to £50,000 by 2020 would cost another £1.2bn.
If the tax cuts were introduced earlier than 2020 they would cost more over the parliament.
No timetable for the cuts was given by Cameron on Wednesday, but his remarks suggest the Tories are keen to suggest changes could some sooner rather than later.
The Conservatives believe their record of tax cuts and spending cuts makes their commitment to further tax cuts in the next parliament credible even though in the past the chancellor has described unfunded tax cuts as a con.
The Tories argue that Labour’s historic spending record puts them in a different position. Cameron said: “What we are saying about these tax reductions is that they are oneswe will make during the parliament. We’ve demonstrated in this parliament that we have been able to do things in a number of budgets.
“We will set out the exact details in each budget. As long as you have got a clear plan and a clear pathway, you don’t have to wait until Britain is back in the black before you make progress with these tax reductions. But I’m not announcing now what will happen in each budget. I’ll leave that to the chancellor.”
Cameron was also asked if he could promise to stick to his pledge to retain defence spending at 2% of GDP in the next parliament, on a trip that saw him pay a farewell visit to Camp Bastion in Afghanistan and the RAF base at Akrotiri in Cyprus where Tornados that have been bombing in Iraq are based.
He said: “In terms of defence and other budgets, we have made some commitments on defence and the defence equipment programme, but greater details obviously will be set out at the next election.” Cameron has promised to ringfence health spending after the next election if the Tories win, a decision that would put greater pressure on other government departments to find savings.
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