Tax row as David Cameron prepares for UK tour

Cameron eats lunch in garden with people who have benefited from tax and pension changes. Picture: AP

In a speech in Bristol yesterday, Mr Cameron also claimed that 94 per cent of households in the UK are now better off as a result of his government tax and benefits policies.

And today he arrives in Scotland – where the latest poll puts him ahead of Ed Miliband as a potential prime minister – to tell voters they have “one month to save the economy” as he hopes to make gains around the UK warning that a Labour government will cost each household £3,028.

But his claims come as Labour launched a new poster campaign accusing him and Chancellor George Osborne of preparing to cut taxes for millionaires and raise VAT from 20 per cent.

The Prime Minister was also accused of hypocrisy by his Lib Dem coalition partners with Chief Treasury Secretary Danny Alexander saying in an interview that one Tory cabinet minister had told him: “You take care of the workers and we’ll take care of the bosses.” Meanwhile Lib-Dem Deputy Prime Minister Nick Clegg branded George Osborne “a very dangerous man”.

In his speech at a rally in the west country, Mr Cameron declared that it was “money back Monday.” He said that as the first Monday of the new tax year it meant that 22.5 million households in the UK would benefit from tax and benefits decisions made by his government.

And with his party promising to raise the income tax threshold to £12,500 and the point of paying the higher 40p to £50,000 he said that the Tories were “the party of low taxes” but insisted this was because of “the moral case”. He said: “There’s the economic case that, in a competitive world, we need to incentivise work by making it pay.

“There’s the progressive case that the best way to help with living standards is to let people keep more of the money they earn. But above all, there is the moral case that it is wrong – frankly immoral – for government to spend money like it grows on trees.

“We know that there is no such thing as public money – there is only taxpayers’ money.”

However, in a speech in Leeds Labour shadow chancellor Ed Balls accused the Conservatives of planning a secret tax cut for millionaires after the election.

Labour insisted that voters have lost an average £1,100 each because of tax and benefit changes under the coalition, as “millions are paying more while millionaires pay less”.

Mr Balls predicted that a Conservative government would increase VAT – something Mr Cameron has explicitly ruled out – and cut the top rate of income tax for earnings over £150,000 from 45p to 40p.

Mr Balls said: “We know that is their secret plan – another big tax cut for millionaires.

“How can it be fair when families here in Leeds and across the country are struggling and £1,100 a year worse-off?

“How can it be fair to have a tax cut for the very richest when our NHS is in crisis and going backwards?

“How can this be fair when we need to get the deficit down and the Tories are now planning deeper cuts in the next three years than the last five?”

Mr Balls said a cut in the top rate of tax to 40p would save someone earning £1 million a year £340,000 over the course of the next Parliament, while someone with income of £5m would get a total tax cut of £1.94m over the same five-year period.

He also warned that SNP policies would “extend Tory austerity” as he tried to distance Labour from a deal with Nicola Sturgeon’s party.

But Tory Treasury minister David Gauke hit back with an accusation that Labour has a secret plan to boost revenues by dragging more workers into the 40p higher rate of income tax and increasing national insurance contributions.

And the Tories pointed out that Mr Balls had refused to rule out a jump in council taxes in England.

For the Lib Dems Mr Clegg blasted Labour’s policies as “economically illiterate”, but also warned that Chancellor George Osborne was “a very dangerous man” because of his plan to balance the books by spending cuts alone. Hitting out at both sides, Mr Clegg warned only his party could ensure a balanced plan to clear the deficit.

He said millions of people would get a tax cut worth almost £400 from a Lib Dem pledge to push the income tax personal allowance to £12,500.

“Labour’s short-term economic plan will lead to mounting borrowing and leave taxpayers short by hundreds of pounds, which is unfair and reckless,” said Mr Clegg, who was campaigning in both Kingston-upon-Thames and the south west of England.

Mr Balls said: “All of our plans are fully costed and paid for. None of our manifesto commitments will require a single pound of extra borrowing.

“So this is the choice at the election, a choice between a Conservative Party which has a track record of breaking their promises on VAT and will raise it again after the election or a Labour Party which has never raised VAT and will not raise VAT in the next Parliament. A Tory way which means millions pay more while millionaires pay less, or Labour’s plan to back millions of working people, save our NHS and balance the books.”