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FactCheck: Cameron's tax cut 'sketches'

By Channel 4 News

Updated on 29 April 2008

When Cameron called for an end to reliefs and credits was it merely, as he claims, a sketch or something more serious?

The claim

"I long for a chancellor who stands up and introduces a budget which abolishes all of Brown's endless reliefs and credits - and uses the money to cut tax rates at the same time."
David Cameron, Today, Radio 4, 29 April 2008

The background

Labour is the party of tax and spend; the Conservatives slash taxes and services to give voters more cash in their pockets.

At least that was the old-fashioned stereotype over which elections were fought.

Nowadays, Cameron's new caring Conservatives have been cautious about promising upfront tax cuts, and pledged to stick to Labour's spending plans on assuming office - although they also talk of the need to reduce public sector bureaucracy and red tape.

In the absence of concrete details of what a Tory budget would look like, interviewer John Humphreys today pulled up the Tory leader on a past pronouncement.

"We've got a pretty good idea from things you've said in the past haven't we?" he said, before quoting part of an online Guardian column that Cameron penned in 2002, and noting how things had changed.

Cameron tried to brush off his call for tax cuts in place of tax reliefs and credits, many of which benefit the poorest in society, saying the comments were made "when I was writing for the Guardian, when I was writing sketches...".

So it was only a sketch? Humphreys asked.

"Well I was writing sketches..." Cameron replied. "I don't think it was a sketch, you were writing in Guardian Unlimited, it was a serious piece," argued Humphreys.

So what was Cameron actually saying - and how does it square with his actions since?

The analysis

Former PR man David Cameron wrote "a series of fortnightly diaries" for Guardian Unlimited from 2001, when he was a wannabe MP, until 2004 when he was deputy chairman of the party.

The pieces are light-hearted in tone, but often touch on serious issues.

Described by the site as "engaging, funny and - unusually for a politician - occasionally frank" they range from the observations on day to day life as a parliamentarian to attacks on Labour politicians and policy.

The piece in question was published after 2002 budget - in which the formerly prudent then chancellor Gordon Brown announced an increase in national insurance to pay for beefed-up NHS spending.

Cameron's rant kicks off by denouncing Labour for effectively breaking its promise not to raise income tax.

He attacks Brown for raising taxes when the budget was in surplus - a sharp contrast from today's Today, when he instead pours ire on the PM for the country's current budget deficit.

In the article, he claims the 2002 budget was the "product of an inveterate fiddler and fixer who sits in the Treasury dreaming up ever more complicated tax incentives and wheezes to determine how we should live our lives".

Instead, he says that Brown could have "simplified all our tax rates and produced one band, somewhere around 20 per cent, that applied to spending, saving, capital gains and income".

The system of redistribution under Labour - of which tax credits play a large part - has seen poorer families much better off than they were under the last Conservative government.

This all seems strangely prescient given the ongoing 10p tax farrago; as history now tells, Brown used his final budget as chancellor to bring the basic rate of tax down from 22p to 20p, and jettisoned the 10p starting rate (at least, on income tax - interest on savings still starts off being taxed at 10 per cent).

Tax simplification is something the Tories have long been keen on, but would evening up all the taxes really lead to the "serene simplicity" Cameron suggests?

Probably not in practice: for example, Labour's announcement last autumn to abolish a relief on capital gains tax, charging a flat rate of 18 per cent, were opposed by the Tories and met with anger by business groups.

It's perhaps not worth getting too bogged down in all the what ifs around how Cameron's flat rate would work - although to bring VAT, which has remained at 17.5 per cent since two increases under the last Tory government, in line with income tax would mean a likely increase.

What about abolishing "all of Brown's endless reliefs and credits"? Cameron's not all uncompassionate Conservatism; he also suggests relief for the poorest people in the form of increased personal allowances, rather than giving money back in the form of tax credits.

Cameron says: "He could have massively lifted tax thresholds to take millions of the poorest people out of tax altogether. Imagine the benefit savings."

Still, the system of redistribution under Labour - of which tax credits play a large part - has seen poorer families much better off than they were under the last Conservative government.

The verdict

As Cameron's Conservative colleague Boris Johnson - whose campaign for London mayor has been dogged by references he had made to picaninnies and "watermelon smiles" in articles written back when he more commonly known as Boris the buffoon - knows only too well, former scribblings can be a rich vein of pain for a politican.

And although far more defensible, Cameron's words are a far cry from the cautious tone he takes as party leader. Stability takes precedence over quickie tax cuts, and the kind of blunt simplification of the tax system he conjures up in the column is likely to cause a lot of sore losers in reality.

FactCheck rating: 4

(at least, with the benefit of hindsight...)

How ratings work

Every time a FactCheck article is published we'll give it a rating from zero to five.

The lower end of the scale indicates that the claim in question largely checks out, while the upper end of the scale suggests misrepresentation, exaggeration, a massaging of statistics and/or language.

In the unlikely event that we award a 5 out of 5, our factcheckers have concluded that the claim under examination has absolutely no basis in fact.

The sources

Taxing Times - David Cameron, Guardian Unlimited, Thursday April 18 2002
Digby Jones admits CGT changes are hated, Telegraph
George Osborne: The Principles of Tax Reform
Three key components of Conservative tax strategy
A tax con not a tax cut, Wednesday March 21, 2007
Conservative tax cut ruled out for four years, Telegraph
FactCheck: Tory tax claims

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