Cameron 'faces £20bn tax cut row'

The Tory leader's Tax Reform Commission - set up last year to create new policy ideas - wants cuts in income and inheritance tax, the Spectator reports.

But such a move could torpedo Mr Cameron's pledge to increase spending on schools and hospitals.

The Tories say the Commission's report is not finished - and they will not speculate on its contents.

The leaked report is likely to be seized on by Labour as evidence that the Conservatives are planning cuts in public services.

The tax commission, chaired by Lord Forsyth, is reported to have come under pressure from Shadow Chancellor George Osborne to water down its proposals ahead of their publication in October.

They are thought to have been leaked to the Spectator in an attempt to head off further criticism.

'Green taxes'

The tax commission was set up by Mr Osborne before Mr Cameron became leader and began distancing the party from a tax-cutting agenda.

Mr Cameron has said economic stability and "sharing the proceeds of growth" are more important than cutting taxes.

Some of the proposals reportedly contained in the commission's report - such as the abolition of stamp duty on share transactions - have already been backed by Mr Osborne.

But his plans to raise more money through "green taxes" are not included and there is no mention of council tax reform, despite Tory attacks on Lib Dem plans for a new local tax.

Speaking earlier, Shadow Paymaster General Mark Francois said: "The message from this year's [Lib Dem] conference is clear: a vote for the Lib Dems is a vote for a 5p in the pound local income tax and an average two grand tax on your house on top."

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