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Election 2015:David Cameron Makes Pledges On Taxation

David Cameron has said there is an “economic, moral and practical” case for lower taxes as he set out his central election pledges on taxation.

The prime minister said, under his plans, no-one would pay tax on the first £12,500 of their income by 2020.

In a speech in Hampshire, he said the government had a track record of taking the lowest-paid out of tax altogether.

But Nick Clegg said it was a “brazen attempt” by the Conservatives to take credit for a Liberal Democrat policy.

The Conservative-Lib Dem coalition has increased the point at which people start paying income tax – known as the annual personal allowance – from £6,475 in 2010-2011 to £10,500 in 2014, meaning those earning less than £100,000 now pay no tax on the first £10,500 of income.

Both parties have pledged to lift this threshold to £12,500 during the next Parliament although they are at odds over who has spearheaded the policy, with both seeking to take the credit.

People’s Money

In the third of a series of speeches setting out the Conservatives’ main electoral themes, the prime minister said his party was on the side of taxpayers, who he acknowledged have endured a “difficult time” since the 2008 recession.

“We should start from the proposition that it is people’s money not government’s money and we should leave them with as much to spend as we can rather than frittering it away on wasteful government projects,” he said.

Under Conservative plans, he said no-one on the minimum wage working 30 hours a week would pay income tax by 2020, effectively taking one million people out of tax completely.

“This is not just a vague promise,” he said. “We have a record.”

Changes to the personal allowance since 2010, he said, had delivered a £700 tax cut for 24 million people and three million people were no longer paying income tax as a result.

Mr Cameron also repeated the party’s pledge – first made at its autumn conference – to help middle earners by raising the income threshold at which people start paying 40% tax from £41,900 at the moment to £50,000 by 2020, saying this “backed aspiration”.

“Those who can afford to” would continue to “pay the most in tax”, he added.

“We make these commitments on the basis of the fact that we have turned round the economic performance of this country,” he said.

The Conservatives have said they can eliminate the structural deficit and return the UK’s public finances to the black over the next five years without raising taxes.

Asked whether the tax cuts were principally designed to shore up Conservative support in southern England in the face of the threat from UKIP, he said “on their own they are never enough” and “what you need is an economic plan that people can see is working”.

Lib Dem Priority

The Lib Dems, who have pledged to raise the personal allowance to £11,000 in 2016 if they remain in government, said they had had to fight for incremental increases in the tax threshold at every Budget since 2010.

“Within government it has always been rightly seen, because it is on the front of our manifesto not the Conservatives, as a Lib Dem priority,” Mr Clegg said.

“I think this is a pretty brazen attempt by the Conservatives which everyone will see through to take credit for a very important policy, which has only been delivered in government because of the Lib Dems.

“I remember very well before the last election, David Cameron said it wasn’t affordable and we couldn’t deliver these huge tax changes.”

Privileged Few

Labour have accused the Conservatives of making £7bn of unfunded tax promises and said they broke a 2010 election promise by raising VAT shortly after the election.

Chris Leslie MP, shadow Chief Secretary to the Treasury, said: “David Cameron and Nick Clegg should be judged on their record of raising tax on ordinary families while giving millionaires a huge tax cut. They have put a privileged few over hard working people.”

The opposition say their own plans to raise the top level of tax from 45p to 50p are part of a fairer approach to ensuring a budget surplus by 2020.

UKIP said Mr Cameron had done little to help “Middle Britain” while in power.

“UKIP will keep pressing for income tax cuts and the scrapping of inheritance tax too in order to give the British people a fairer deal,” MEP Patrick O’Flynn, the party’s economics spokesman said.

The Taxpayers Alliance campaign group said Mr Cameron’s tax commitments were welcome but were “not as generous as they first seem”.

“He is not planning to raise the 40p threshold quickly enough to keep pace with inflation and he has said nothing about what he would do with national insurance which is a second income tax in all but name,” said its director Jonathan Isaby.