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Last Updated: Thursday, 19 October 2006, 11:30 GMT 12:30 UK
Back to the old tax row?
By Nick Assinder
Political correspondent, BBC News website

Lord Forsyth, the head of shadow chancellor George Osborne's tax commission, wants many of his 21 billion tax-cutting proposals implemented immediately - he will even be delighted if Gordon Brown does it.

David Cameron at Tory conference
Mr Cameron warned conference off tax cuts
He is very likely going to be disappointed - Mr Osborne has welcomed his report but, in effect, told him "no way" would he be proposing them at the next election.

And, Gordon Brown's ally, Ed Balls, has spent most of his time declaring how the package would hit the poorest hardest, help the well off and require massive cuts to public spending.

So, the heavy, detailed and strategic 175-page document, which advances any number of radical approaches to future taxation, is heading for the back burner then.

That is not quite the case. Speaking at the launch of the proposals, Mr Osborne welcomed it as a serious piece of work that mapped out the "direction of travel" his party would now take.

He went further, saying that he would use it as the basis for a "re-balancing" of the tax system to use increased green taxes to cut others. But not yet.

Political row

The Tory mantra remains the same, as Mr Osborne said: "We will not be promising up-front, unfunded tax reductions at the next election."

Any that do come later will only be as a result of continuing economic growth that has also helped finance public service improvements.

As for the chancellor, it must always be possible that anything he finds attractive in the detailed proposals might be lifted for his own programme.

But none of this will affect what is now set to be the political row over these proposals.

David Cameron has spent much of the time since his election insisting he would not promise to cut taxes, despite increasing pressure from sections of his own party, led by Lord Tebbit and Edward Leigh.

Indeed, he told his recent conference that those wanting him to "flash up" some tax cuts to show what he stood for would be sorely disappointed.

His greatest fear is that any hint that he was preparing to enter the next election campaign offering tax cuts would immediately see a return of the old Labour taunts - justified or otherwise - about Tory plans to slash public spending.

Matter of trust

Yet the document appears to play directly into Labour's hands, with ministers seizing on it to claim the Tories were at it again.

That is, they were preparing massive tax cuts to help the rich, not the poor - who would benefit the least - and which could only be financed through equally massive reductions in public spending.

It will be an old-fashioned row. And, as it rages, the details will be lost. Claims and counter-claims will be traded and, by the end of it, voters may well have no idea whatsoever exactly what Mr Cameron plans to do or, perhaps more importantly, when.

George Osborne, shadow chancellor
Mr Osborne has repeated rejection of early tax cuts
That is probably Labour's hope. They believe the commission has handed them a longed-for weapon to use against Mr Cameron and his apparently reviving party.

Mr Cameron, on the other hand, will continue to play down the report hoping it will reassure his party's tax cutters by suggesting the idea is still alive and kicking, while his pledges not to implement it right away will reassure voters.

The danger is that that might appear a confusing and confused message.

So it will all probably boil down to a simple matter of trust.

Will voters believe Mr Cameron when he tells them that he wants to lower their taxes, but never at the expense of a stable economy or good public services?

Or will they be persuaded by Labour's suggestion that the document marks a return to what they claim is the old Tory agenda of tax cuts funded by slashing public services?

It is a row that may well run right up to the next general election.

Tory group urges 21bn tax cuts
18 Oct 06 |  UK Politics
Osborne dismisses tax cut calls
03 Oct 06 |  UK Politics
Brown faces company tax threat
18 Oct 06 |  Business
Cameron facing tax cuts demands
02 Oct 06 |  UK Politics

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