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Report from Conservative Conference 2011

A brief report on tax debate and announcements at the 2011 Conservative Conference

Chancellor George Osborne rejected calls for temporary tax cuts to boost the economy, warning that they would put Britain's credit rating and low interest rates at risk. In his keynote speech he equated calls, including from within his own party, for tax cuts with demands from those on the left for more stimulus spending, saying: “Right now, temporary tax cuts or more spending are two sides of exactly the same coin - a coin that has to be borrowed.” However the Chancellor did put already announced tax cuts, and tax simplification, centre stage in his efforts to show the Government was going for growth. He also announced money for a council tax freeze for another year.

Osborne dismissed the proposal for differential tax rates for good and bad companies floated at Labour’s conference the previous week. Irresponsible business practices should be dealt with through an effective regulatory system, but the idea of two tax rates for ‘producers’ and ‘predators’ was “frankly ridiculous” and “unworkable”.

David Cameron emphasised that fairness was at the heart of the Government’s deficit reduction strategy. “Those with the most money are bearing the biggest burden”, he said, citing the permanent bank levy and increase in the charge on non-doms. Meanwhile, the Government had “given real help to the poorest and most vulnerable”, taking over a million of the lowest-paid out of tax altogether and boosting the state pension by linking it to earnings. “This is a one-nation deficit reduction plan - from a one-nation party,” he proclaimed.

Osborne promised that the Government would get tough on tax evasion: “I’ll tell you what this Conservative Chancellor says to rich people who evade their taxes: We will find you. And we will find your money. The days of getting away with it are over. Just as tough on tax evasion as benefit fraud.” He cited the bank levy, higher non-dom levy and Swiss tax treaty as measures the Government were taking to help ‘end the something for nothing society’.

The Northern Ireland Secretary said that the devolution of corporation tax to the Northern Ireland Assembly was in the balance. Owen Paterson told the conference that he was setting up a joint-ministerial group to examine a number of issues.

Work and Pensions Secretary Iain Duncan Smith said that tax breaks for married couples must be implemented before the next election. In his speech later in the week the Prime Minister repeated his promise that “we will recognise marriage in the tax system”, though he did not explicitly state this would be possible in this Parliament.

There was strong pressure within the party for additional tax cuts, especially the abolition of the 50p rate. According to a poll of Conservative members, 42 per cent want more spending cuts so taxes can be reduced to boost growth and another 10 per cent want bigger cuts to avoid tax rises. Meanwhile, tax cuts were among the highest priority for a number of prominent Tories interviewed by the FT. Former party treasurer Michael Spencer called on the Government to drop the 50p rate of tax and offer employers an NI tax holiday if they hire young people under the age of 23. New MPs Jo Johnson (Boris’s brother) and Sajid Javid also called for the 50p rate to go, as did disgraced former MP Jeffrey Archer. Senior MPs David Davis and John Redwood both made less specific calls for tax cuts to foster growth, while the actress Joan Collins (a Tory supporter) wanted tax cuts ‘across the board’ with VAT the top priority.

There were signs that, in the current economic climate, the environment is a diminishing priority for Conservatives. At a fringe meeting, party members greeted the assertion that 'climate change is not a pressing concern' with spontaneous applause. George Osborne said environmental regulations were “piling costs on the energy bills of households and companies” and promised that Britain would “cut our carbon emissions no slower but also no faster than our fellow countries in Europe.” At a fringe meeting, Greg Barker, energy minister, rejected calls for a carbon tax on domestic gas use.

Conservative Way Forward, a Thatcherite ginger group, launched a tax transparency campaign at the conference, calling for the introduction of “a simple, transparent taxation system that means everyone can easily see exactly how much tax they pay” in the belief this will increase pressure for taxes to be lowered.

A small number of influential voices at the conference called for a switch to property and land taxes. Tim Montgomerie, editor of ConservativeHome, said the party should introduce a mansion tax to fund tax cuts for job creators and the lowest paid. New MP Nick Boles called for the introduction of a Land Value Tax.

In a TV interview, David Cameron said Britain should consider a fat tax.

In a question and answer session, Treasury minister David Gauke MP said the DWP and HMRC were working closely together to tackle fraud, overpayment and error in the tax system. He also highlighted tax cuts for small firms and the work being done by the OTS to make the tax system work better for small businesses.

Making a guest appearance at a fringe meeting, Lib Dem Chief Secretary to the Treasury, Danny Alexander, said the Government’s efforts to make the tax system simpler – such as setting up the OTS – and more predictable – e.g. the corporate taxes road map – were designed to make the business climate more competitive

The CIOT questioned Iain Duncan Smith, Secretary of State for Work and Pensions, about the tight timetable for the introduction of Universal Credit and PAYE Real Time Information, and David Gauke, Exchequer Secretary to the Treasury, about HMRC’s heavy-handed programme of business record checks. (See ‘Ministers pressed on Business Record Checks and RTI’)

George Crozier
CIOT External Relations Manager
Thursday 13 October 2011

NB. George has produced short reports from all three of the main UK party conferences


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