The Prime Minister said he wanted to “give people back some of their hard-earned money” – the strongest hint yet that his party will pledge to cut taxes ahead of the 2015 poll.
His remarks came after Chancellor George Osborne claimed the UK government’s deficit reduction plans can be achieved without further tax rises following the vote in two years.
Mr Cameron appeared to go a step further yesterday, insisting he is a “low-tax Conservative” and said that reducing taxation levels was what “drives” him as a politician.
But a leading economist claimed last night that the move was “not tenable” and would lead to “bigger spending cuts” in the next parliament.
The coalition government has refused to reduce the basic rate of income tax, with Mr Cameron saying earlier this year that “tax cuts don’t completely pay for themselves”.
However, as part of a wide-ranging interview and in an apparent policy shift, the Prime Minister suggested yesterday that an economic recovery could fund tax cuts in the next parliament.
He said: “I think your economy does better if you say to people, ‘You’ve worked hard, you’ve done the right thing, here is some of your own money back in a tax reduction’.”
He added: “I’m a low-tax Conservative. I think as we start to see the economy healing – and it is healing; as we start to see the economy grow stronger – and it is growing stronger; as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes. That is what drives me as a Conservative.”
But Professor John McLaren, an economist with the Centre for Public Policy for Regions, warned that tax cuts would lead to a “second wave of bigger cuts” on a more severe scale than the past few years.
He said: “If you lower taxes then you have to find even bigger spending cuts, which have already been incredibly large. Reducing tax would mean there was a second wave of bigger cuts. If any taxes fall it’s likely to be a small symbolic thing in one area and a switch to another area. We already have big cuts of 3 per cent built in for 2016-17.
“Reducing taxes would mean that cuts would be larger on average than what we’ve seen in the lead-up to 2016-17. It’s not tenable to have significant tax cuts and keep the same spending profile. ”
The Prime Minister said he believed securing an outright Conservative majority in 2015 was an achievable goal as he appeared to attempt to distance himself from his coalition partners.
Mr Cameron, who has attempted to placate Eurosceptic Tory back-benchers with a promise of a referendum on membership of the European Union by the end of 2017, said he would be “more liberated” without Nick Clegg’s Lib Dems.
He said: “I’m aiming for victory and I’m going to fight all out for victory, and I think victory is achievable if we really roll up our sleeves and deliver.”
A Lib Dem coalition source said: “For the next election all parties will be setting out their tax and spending plans. The Liberal Democrats have different tax priorities from the Conservatives.
“For example, the Deputy Prime Minister [Nick Clegg] has said that there should be tax rises for people at the very top, such as through a mansion tax.”
Labour MP Willie Bain said Mr Cameron would only pursue tax cuts for top earners while imposing cuts to public services. He said: “David Cameron has already given a tax cut: to his millionaire cabinet colleagues and Tory donors. Despite all the attempts to rebrand his party, we know that it’s the same old Tories.”