The corporation tax cuts would be funded by removing some of the exemptions and allowances. The working tax credit rise would be paid for by tightening up the benefits system. The inheritance tax cut would be balanced by a £25K per annum levy on non-domiciled residents. The rest of the reductions would be funded by higher green taxes – fuel duty and VAT on domestic flights appear to be the leading candidates.
Finally, the Tories also plan to tinker with alcohol taxes. Higher taxes for alcopops and 'super-strength' beers and ciders would be balanced by reduced taxes for low-alcohol beers and ciders (although if anyone can think of a beer with less than 2.5% alcohol, let me know...). 90% of alcoholic drinks would be unaffected.
I think that's a comprehensive survey of policies announced so far. Plainly, it is a mixed bag. I'm sceptical about increased green taxes and would be much more radical about cutting taxes elsewhere. Nonetheless, the commitment to consistently reducing the tax burden over the long-term is very welcome, and the already-announced tax policies are much better than the government is offering.
Put it this way: it's a good start.
* According to the Daily Mail, "Under current rules, a single mother with two children under 11, working 16 hours a week on the minimum wage, has a net income of £487 a week, most of it tax credits. To take home as much, a two-parent household on minimum wage would have to work 116 hours a week between them."
When I'm moaning about tax, people often say, "Well, would it be any better under the Conservatives?" My normal response is, "Yes, but probably not by much – at least initially." That's not exactly a precise answer, so I thought it would be worth having a closer look and working out just what the Tories' tax policies are.
The general point is that they are not promising any up-front tax cuts that aren't balanced by corresponding rises elsewhere. There seem to be two reasons for this: firstly, they don't want Labour to be able to say they're going to 'cut services'; secondly, they're worried that by the time they get into power, the country's finances will be in such a bad state that any promises made now could turn out to be undeliverable.
However, the Conservatives are committed to sharing the increased tax proceeds of economic growth between higher spending on services and lower taxes. That's a bit mealy-mouthed, but over the course of a parliament or two, such a policy could significantly reduce the tax burden as a percentage of GDP.
There are some specific commitments. The inheritance tax threshold would be raised to £1m. Stamp duty on homes under £250K would be abolished for first-time buyers. Stamp duty on shares would be abolished. The main corporation tax rate would be reduced to 25%, and the small business rate would be kept at 20% instead of rising to 22%. The couples' penalty* in the tax credit system would be eliminated by raising the working tax credit for couples with children. There would also be a tax cut for families, probably in the form of a transferable tax allowance for married couples with a child aged five or under. [Click 'read more' to continue]