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Sunday, 6 February, 2000, 17:17 GMT
Portillo signals tax rethink

Michael Portillo: On the attack over tax

Michael Portillo has said he believes the UK faces a "brain drain" if taxes are not reduced, and gave a clear signal that the centrepiece of Tory economic policy is in line for a rethink.

The shadow chancellor's comments came in the same week he announced the ending of Conservative opposition to a national minimum wage and an independent Bank of England.

The Kensington and Chelsea MP, appointed to William Hague's shadow cabinet this week, was talking to BBC Radio 4's World at One programme.

He said: "I believe it is important we should be reducing taxes as a proportion of national income and the reason I say that is because we need to be competitive.

We do indeed want to see taxes fall as a share of national income
Michael Portillo
"Around the world people are seeing brain drains occurring - good people leaving economies where taxes are high and taking their skills and going to places where taxes are lower.

"Unless we keep control of the tax burden we are going to lose people."

The Tories made their controversial "tax guarantee" promise last autumn. The party pledged that a future Conservative government would reduce the tax burden over the course of a Parliament.

Critics have attacked the policy as having no figures attached to it, and as a pledge that in the event of recession would require deep cuts in spending to be achieved.

Chief Secretary to The Treasury Andrew Smith said the Tories' insistence on year-on-year tax reductions would mean service cuts for the NHS.

He said: "Once again the shadow chancellor has confirmed his dogmatic attachment to the Tories' 1992 position of tax cuts year-on-year - regardless whatever economic circumstances might arise - a so-called tax guarantee which is really an NHS spending cuts guarantee."

Andrew Smith Andrew Smith: Tax cuts will mean service cuts
Mr Portillo said during the programme he was "ready to discuss" the controversial tax guarantee.

"We do indeed want to see taxes fall as a share of national income."

However, asked if that applied in all circumstances, he said: "I am happy to discuss that."

'Help make changes'

Mr Portillo said he had changed his mind on opposing the national minimum wage when recent evidence showed his fears about job losses were not borne out by the experience.

He said on the independence of the Bank of England, he had decided "some considerable time ago" the policy was wrong but he paid tribute to the former Shadow Chancellor Francis Maude for laying the "ground work" for the change.

Asked if the policy U-turns demonstrated the Tories economic analysis had been deeply flawed, he said: "We learn by experience."

Asked if he was not a liability for his party given his association with the last Conservative government, he said his time in government and losing his seat meant he had the experience to "help makes changes" in Tory policies and the Tory party.

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See also:
03 Feb 00 |  UK Politics
Portillo springs surprise U-turns
01 Feb 00 |  UK Politics
Portillo promoted in Tory shake-up
26 Nov 99 |  UK Politics
Michael Portillo: A political rebirth
09 Sep 99 |  UK Politics
Portillo: In his own words
30 Nov 99 |  UK Politics
Portillo returns to Westminster
26 Nov 99 |  UK Politics
Portillo victory boosts Tories
26 Nov 99 |  UK Politics
Portillo backing Hague
26 Nov 99 |  UK Politics
Comeback for Portillo

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