Advertisement

Cameron's inheritance tax cut will help only a few - Labour

Britain's Prime Minister David Cameron delivers a speech at St Luke's Church Hall in Cheltenham, England, April 12, 2015. REUTERS/Kirsty Wigglesworth/Pool

By William James

LONDON (Reuters) - Prime Minister David Cameron's promise to cut an inheritance tax will help only a few people, his Labour rivals said, with both parties competing on tax and spending plans to win over voters in a May 7 election.

The future of Britain's $2.8 trillion (£1.91 trillion) economy lies at the heart of what is expected to be the closest election in decades. Cameron's Conservatives and Labour, led by Ed Miliband, hold starkly different views on how to cut the country's deficit and spend the proceeds of its steady economic recovery.

Cameron has promised to cut inheritance tax so that parents will be able to pass on a family home worth up to 1 million pounds to their children without paying the tax.

Inheritance tax has become increasingly unpopular with many Britons as rising property prices, particularly in London, mean a greater proportion of people are liable to pay it.

"Yes, it’s right that the wealthiest pay that tax," Cameron said in a speech on Sunday. "But no – it was never meant for people who spent their working lives as teachers or nurses or running small businesses. It was never meant for people in modest homes, on middle incomes."

But Labour lawmaker Harriet Harman, whose centre-left party wants to raise taxes on high-value homes to clear a large deficit, said people would be incredulous "that at this point in time the Tories are offering an inheritance tax cut".

While Britain's economy has returned to growth, the next government will still be constrained by a large budget deficit and 1.5 trillion pounds of public debt.

"It's becoming clearer and clearer as we get to the election how actually the Tories are helping a few people, and we want everybody to be better off," Harman said.

Seeking to tap voter anger over perceived unfair tax rules, Labour on Sunday pledged a clampdown on tax avoidance which it said would raise 7.5 billion pounds per year.

The Labour Party will launch its election manifesto on Monday, and the Conservatives will launch theirs on Tuesday.

Opinion polls show both parties remain effectively neck-and-neck despite two weeks of fierce campaigning, leaving Britain facing the prospect of a second successive hung parliament.

That has prompted media reports that some Conservative MPs are unhappy with the way Cameron is running his campaign, which has been tightly focussed on his perceived economic competence while casting his rival Miliband as fiscally incompetent.

Cameron told The Sunday Times there would be no change of approach, summoning the words of a 1960s petrol advertising campaign to show he still had a "tiger in the tank".

"There's not just a tiger, there's a couple of elephants, a lion and a yeti in the tank. This is a very energetic campaign," he told the Sunday Times.

(Editing by Susan Thomas)