Portillo calls for tax cuts

Tax cuts are at the centre of the Conservative agenda

The Shadow Chancellor, Michael Portillo, has pledged that the Conservatives will cut taxes for every motorist by £100 a year if elected.

Pensioners, families, and everyone who saves or drives would be better off under Tory plans which will be unveiled in their manifesto on Thursday, he said.

Mr Portillo made a cut of 6p per litre in the price of petrol the centrepiece of his £8bn plan to lower taxes.

Speaking to BBC News, Mr Portillo accused Labour of tax increases which hit the poorest hardest.

Gordon Brown is a man committed to increasing taxes

Shadow Chancellor Michael Portillo

He said the Conservative approach was to give people more choice and responsibility - giving them the freedom to spend their own money.

But Labour and the Liberal Democrats immediately attacked the Tory plans.

Liberal Democrat leader Charles Kennedy said that he did not believe the electorate would support the size of the Conservative spending cuts that their plan required.

The figures simply don't add up

Charles Kennedy

And he said that people would remember that it was the Conservatives who had ntroduced the fuel tax escalator in the first place.

And Tony Blair said that the Tories' "irresponsible tax cuts would threaten a return to boom and bust."

Modest beginning

Mr Portillo accepted that his tax plan was only a modest beginning.

But he said that higher rate taxpayers would benefit in later years from further tax cuts under the Conservatives if the economy allowed.

And he rejected accusations that there was a failure of nerve in not calling for larger tax cuts, because the Conservatives had pledged to match Labour's spending plans in key areas.

Labour had implemented spending plans "that we would not have stuck to" on health and education, Mr Portillo said.

But he said that "our discipline is that government spending must increase within the growth rate of the economy".

Fears on spending

Mr Portillo said that another Labour government had unsustainable plans to increase spending and would be forced to increase taxes to pay for it.

"Gordon Brown is a man committed to increasing taxes," Mr Portillo said.

He defended his own plans for savings in departmental budgets in trade and industry and transport and the environment, and changing the way universities were funded.

But Labour said the Conservatives would have to make cuts in basic services like health and education to fund their tax cuts.

Pension controversy

The Labour Party has attacked Conservative plans to allow young people to opt out of the National Insurance system.

Alaistair Darling said that this left a £6bn black hole in the National Insurance Fund which would have to be met by higher borrowing.

But Mr Portillo said it was wholly responsible to see whether young people could fund some of their own pensions

In the long run, that would ensure that people got a higher return on their investments, and their higher pensions would lead to higher tax returns by the government.

Mr Portillo said that "this government is so blinkered" that it cannot see the long-term problem.

Labour has published tape recordings of private meetings where Mr Portillo said that under his plan "there is going to be a hole in the National Insurance Fund" and that it could be overcome "for a start, by selling gilts."

But Mr Portillo said that it was right to discuss the costs of transition to a new system, using all the resources of the financial community.