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Tory group urges £21bn tax cuts Tory group urges £21bn tax cuts
(20 minutes later)
The commission set up to advise the Conservative Party on tax policy is to recommend cuts worth £21bn.The commission set up to advise the Conservative Party on tax policy is to recommend cuts worth £21bn.
It wants to reduce the basic income tax rate from 22% to 20% and remove 2.5 million low earners from paying tax.It wants to reduce the basic income tax rate from 22% to 20% and remove 2.5 million low earners from paying tax.
The Tax Reform Commission also backs abolishing stamp duty on shares and cutting business taxes in its report, due to be published on Thursday.The Tax Reform Commission also backs abolishing stamp duty on shares and cutting business taxes in its report, due to be published on Thursday.
Shadow Chancellor George Osborne said the party would accept some recommendations and reject others.Shadow Chancellor George Osborne said the party would accept some recommendations and reject others.
Tory leader David Cameron has said that economic stability - not tax cuts - should be the main priority.Tory leader David Cameron has said that economic stability - not tax cuts - should be the main priority.
'Fewer pay income tax' Some we will accept, some we will modify, and others we may reject George OsborneShadow chancellor
The commission recommends abolishing inheritance tax and replacing it with a "capital gains tax on death", which would not be levied on family homes.The commission recommends abolishing inheritance tax and replacing it with a "capital gains tax on death", which would not be levied on family homes.
The main corporation tax rate would be lower and more "competitive internationally", the report adds.The main corporation tax rate would be lower and more "competitive internationally", the report adds.
Meanwhile, the earnings threshold, below which people do not pay income tax, would increase from £5,035 to £7,185.Meanwhile, the earnings threshold, below which people do not pay income tax, would increase from £5,035 to £7,185.
Mr Osborne said: "The commission has given us a menu of options that merit serious consideration. Some we will accept, some we will modify, and others we may reject.Mr Osborne said: "The commission has given us a menu of options that merit serious consideration. Some we will accept, some we will modify, and others we may reject.
"But the framework of our tax policy is now set.""But the framework of our tax policy is now set."
Ed Balls, the economic secretary to the Treasury, said the proposed tax cuts would not help ordinary families and would leave a black hole in the public finances.Ed Balls, the economic secretary to the Treasury, said the proposed tax cuts would not help ordinary families and would leave a black hole in the public finances.
'Dangerous for economy' The hole in the finances that this would create is dangerous for the economy Ed Ballseconomic secretary to the Treasury
He added: "The scale of the tax cuts is huge. The problem is there is no indication here at all as to how it will be paid for.He added: "The scale of the tax cuts is huge. The problem is there is no indication here at all as to how it will be paid for.
"David Cameron has denied he would cut public spending. The hole in the finances that this would create is dangerous for the economy.""David Cameron has denied he would cut public spending. The hole in the finances that this would create is dangerous for the economy."
The commission has not looked at council tax or VAT, the report, obtained by the BBC, makes clear.The commission has not looked at council tax or VAT, the report, obtained by the BBC, makes clear.
It says: "Tax reform can work. The economies of other countries have benefited greatly from similar programmes of reform."It says: "Tax reform can work. The economies of other countries have benefited greatly from similar programmes of reform."
There had been reports that the commission, chaired by Lord Forsyth, had come under pressure from the shadow chancellor to water down its proposals.There had been reports that the commission, chaired by Lord Forsyth, had come under pressure from the shadow chancellor to water down its proposals.
BBC economics editor Evan Davis said the Conservative Party's tax policy was "getting some shape".BBC economics editor Evan Davis said the Conservative Party's tax policy was "getting some shape".
But Mr Cameron had to work out how to combine these with higher spending plans for public services, he added.But Mr Cameron had to work out how to combine these with higher spending plans for public services, he added.