Portillo calls for tax cuts

Shadow chancellor Michael Portillo has called for fuel duty and other taxes to be cut.

He said the tax increases since Labour came to power were hurting the UK's economy and harming its position on the world stage.

A tax freeze... would leave the British people out in the cold. Fuel tax levels are too high and should be cut.

Michael Portillo

Mr Portillo said freezing fuel duty - as chancellor Gordon Brown is expected to announce in his pre-Budget report on Wednesday - was not enough.

"A tax freeze would merely lock-in the high levels of fuel tax which caused the petrol crisis in the first place," he told the Confederation of British Industry annual conference in Birmingham.

"It would leave the British people out in the cold. Fuel tax levels are too high and should be cut."

Mr Portillo said that UK people knew they were paying more taxes overall than before the last election.

Wrong direction

He said: "The gap between our tax burden and the tax burden in the highly successful American economy has now risen to 8.5% of national income - that is a huge weight for British businesses to bear and the prospects are for higher taxes to come.

"Britain is moving in the wrong direction."

Mr Portillo added: "This is not the government you voted for. It was elected on the basis that it would not increase burdens on business.

"For a while it pretended that it hadn't. Now it's given up on that and vilifies those who urge that we should cut taxes as our competitors are doing."

He said that the effect of the extra taxes was to reduce people's disposable income, despite the economic growth seen in the past few years.

Clear policy

This reduction in spending was bad news for businesses.

Mr Portillo also questioned how Gordon Brown would be able to put forward economic plans for the next parliament, if he did not know whether or not the UK would have its own currency during the period.

He said that whether people agreed or disagreed with Conservative policy on the euro (to rule out membership for the next parliament), at least business would know where it stood.

The Labour position is that a referendum on UK adoption of the euro will be held and if and when the economic conditions are deemed right.