Is the Tory tax plan a gift to Gordon?

Is the Tory tax plan a gift to Gordon?

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    Are we seeing the start of the general election campaign?

All the information coming out of the Brown camp before June 27th was that his first target would be to push the Tories from the centre ground by forcing them to the right. If that indeed was the plan then there will be delight within Labour this morning.

For the Tory John Redwood policy commission is publishing its findings today and the headline grabbing move is a plan to, as the BBC report puts it, to “abolish inheritance tax because it penalises too many middle-income families. It says rising property prices mean that estates of those who could not in any sense be described as rich” are now above the £285,000 payment threshold.”

    It’s the Tories bad luck that the policy group is reporting in the same week as the stock market collapse is leading to suggestions that the upward trend in house prices might go into reverse.

Other key elements of the Redwood plan are aimed at reducing taxes on business with the aim of boosting economic competitiveness – which looks set to be the buzz phrase in the next campaign.

At the heart of Redwood, and presumably Tory thinking, is this from the report: “The evidence in favour of lower marginal rates of tax on income and profits is overwhelming. Countries with very low corporation tax rates have seen businesses grow especially quickly. Far from sacrificing revenue, a substantial marginal tax rate cut can, as a result of business and economic growth, lead to an increase in overall revenue after a year or so.”

The massive challenge for the Tories is that every-time they mention tax cuts that gets translated by the Labour propaganda machine into “Tory plan to slash public services”. Brown is the past master of this.

    Will it be as easy for Labour as it has been in the past three general elections to demonise the Tories in this way? That looks set to be the deciding factor.

There’s little doubt, though, that inheritance tax has, with rising property prices, moved from something that only used to concern the rich into an issue that affects large sections of the population, particularly in southern England. It’s here that the Tories have to pick up many of the seats they lost in the Blair land-slide of 1997.

Mike Smithson

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