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Cameron: We will cut inheritance tax, but be patient
Paul Waugh, Deputy Political Editor23.03.09
DAVID CAMERON was today standing by his pledge to slash inheritance tax despite a warning from Kenneth Clarke that the move will have to be shelved because of the recession.
The Tory leader has told friends "a promise is a promise" and he believes that the policy is crucial to lifting the tax burden on families.
But the deepening downturn and soaring government debt are forcing the Conservatives to reschedule their tax and spending plans and the cut is now likely to be introduced later in the next Parliament - should the party win the election.
Mr Clarke plunged his party's tax policy into disarray yesterday by downgrading the promise to scrap the levy on estates worth less than £1million.
Mr Cameron was set to defend the policy tonight at a regular question-and-answer session amid dismay among party insiders that Mr Clarke's unscripted remarks had undermined shadow chancellor George Osborne on the issue.
Mr Osborne electrified the Tory party faithful two years ago when he pledged to abolish inheritance tax, but Mr Clarke claimed yesterday that the idea was now only "an aspiration".
Last week Labour published advertisements attacking the Tories for seeking to offer tax perks to the richest in society when most people were struggling with the recession.
Mr Clarke's remarks appeared directly to contradict Mr Cameron's own on the pledge. The Tory leader said only last month that there was "no delay" on the policy, but it seems that it will not be classed as a "priority".After 24 hours of confusion, shadow Commons leader Alan Duncan confirmed today that the policy still stands and will definitely be introduced, but not immediately.
The party denied claims of a top-level split, but the row threw the spotlight on to the credib-ility of the inheritance tax cut, to be funded by a £25,000 levy on "non-doms" - foreigners not classed as domiciled in Britain who enjoy tax benefits.
A fall in the number of "non-doms" has cast doubt on the viability of the policy.
The controversy put fresh pressure on Mr Cameron over tax after the party had indicated on Friday that it would have to go ahead with the Government's 45 per cent tax rate on the rich.
Mayor of London Boris Johnson was joined by party activists in condemning the plan, claiming that it was a "deterrent to enterprise".
Business Secretary Lord Mandelson said that Mr Clarke's comments indicated he was out of line with Mr Osborne and Mr Cameron. "Ken Clarke's comments have thrown George Osborne's tax plans into confusion," he said. "The thing about Ken is that he just cannot help but say what he thinks.
"On economic and taxation policy, as on so many issues, his views are nearer to the Government's than to the Cameron-Osborne Tory party."
Reader views (21)
Well done Ken Clark for telling us How it is. The conditions today are quite different to last year when the plan to cut inheritance tax was unveiled. Tory supporters will understand that in the current climate, cutting IHT cannot be a priority.
- John, Edgware MIDDLESEX
If funds are available to cut Inheritence Tax then funds must also be available to prescribe drugs free of charge to everyone diagnosed with early stage dementia. In fact abolishing ALL presecription charges should come before wealthy tories feathering their own nests.
In fact free residential care home treatment comes next ...etc.etc..
- Melvyn Windebank, Canvey Island, Essex
Rob the poor and look after themselves those politicians !
- Joe, Swanley Kent
Scrap income tax and make inheritance tax 95% - you can't take it with you so why not spend it now.
- Glenn, London
It is a vile tax that should never have existed. It should be scrapped at every level as stealing from the dead's already taxed posessions is so utterly wrong.
- Stephen, London
the tax is wrong anyway you pay tax all your life then when you die if you have been lucky enough to have earnt a few quid then the greedy ones want there share of that as well cmon enough is enough i think we pay so much tax in this country is disgusting
- Rob Fiddler, london
It seems that the Tories will also keep Tax avoidance as a perk for the very rich while those of us on PAYE will pay for the folly and greediness of the Financial Sector. I feel that M.P.'s and Peers should be made to reveal the full extent of their incomes and also the amount of Tax they pay each year.
- Humph, Acton England
I always wonder why there's so much dislike of inheritance tax. You can't take it with you, and you could have given it away to your children well before you die, unless you die young.
So here's a cheap step in a good direction. Abolish inheritance tax on things left to the children by a parent who dies aged less than 75, or to a child aged less than 25. This doesn't happen very often.
We could afford this even with the economy in the current mess.
- Nigel, London
It is perfectly clear that the Conservative pledge will be met. It has not been "kicked into the long grass" as Labour adherents are trying to make out. They cannot face up to the fact that their Government has brought the country to its knees financially and they would rather have us talk about anything else. But their spin and myopia only serve to heighten their foolishness.
- James Elliott, Eastbourne UK
So according to Mandy ..."The thing about Ken is that he just cannot help but say what he thinks." Pot, kettle and black come to mind. Labour have clearly run out of ideas (if they ever had any that they didn't pinch from the Tories or Lib Dems) that all they can do now is to try and highlight non-existent confusion in the other parties. What Ken said is NOT inconsistent with tory policy, and nor is it unrealistic. When Osborne made the promise to cut IHT the economy wasd nowhere near the state of collapse it is now. Most sensible people (that automatically excludes Labour politicians & voters)realise that with the current mess in the UK finances caused by Brown & Darling it's only right to say now that whilst they still intend to do it, but it might not happen immediately. THAT's what you call "prudent" Gordon!!!
- Malcolm, London, England
Of course inheritance tax should be abolished for estates under £1 milion, not just cut! My savings are taxed three times - once when earned, once when saved, then once again when inherited. I came into this world with nothing, from utterly feckless parents, and I have worked my way up to wealth. Why should my children not benefit from this? Why should my hard-earned savings go to fund yet more feckless families?
- Liz, London,UK
We pay tax on all we earn, buy & save.
Death taxes were brought in to tax the very rich. Now they hit everyone except spendthrifts or the poor.
Like Labour, these taxes stink.
Martin
- Martin, Bracknell England
Am generally in favour of lowering the tax burden but am not fussed about Inheritance tax. Leaving too much wealth to children just leads to wasted and unproductive lives. In any event, the priority has to be to get the public debts under control. Spending cuts can only take us so far. The markets will expect this and Cameron knows it.
- Alan, London
The UK economy needs a bigger kickstart than an IHT reduction. This is yet another smokescreen put up by Mandelspin to detract us from Labour's ruining of the economy.
- Nobby Clark, Perth, Scotland
Add to this COUNCIL TAX.
Like inhertance tax this hits the the man in the street more and who are lest able to afford it.
- Bernard Parke, GUILDFORD
Throughout my business life I paid enormous taxes under old labour even on £12000 a year, even building society interest was called unearned income and taxed at fifty percent.
Now as I approach eighty my savings bring in nil interest, my investment in bank shares is valueless and my pension from Equitable Life has fallen from £7600 a year ten years ago to £2800 although it should have gone up every year. Gordon has even ignored the Parliamentary Ombudsman findings that he should pay compensation for this failure.
Now it appears they wish to grab forty percent of my house and remaining savings when I drop dead.
DOES IT NEVER OCCURE TO OUR POLITICIANS SOME OF US WANT TO HELP OUR FAMILIES WHO TODAY MAY SUFFER FROM ILL HEALTH, VAST DEBTS OR MARITAL BREAKDOWN. WE DO NOT EXPECT THEY WILL GET ANY HELP FROM CABINET MINISTERS WHO ARE TOO BUSY COLLECTING THEIR EXPENSES ON SECOND HOMES.
AFTER-ALL INHERITANCE TAX IS NOT PAID BY THE REALLY RICH WHO HAVE THEIR PROPERTY PORTFOLIOS IN FAMILY TRUSTS. AS IT WAS FAMOUSLY PUT YEARS AGO BY ONE SUPER RICH PERSON, 'SURELY TAXES ARE FOR THE LITTLE PEOPLE'
PERHAPS ONE DAY WE WILL HAVE A FAIR SOCIETY. NOT ONE THAT TAXES THE DEAD OR YOUNGSTERS JUST STARTING OUT EARNING £8000 a year. A POLITICIANS DREAM TAX THEM FROM THE CRADLE TO THE GRAVE.
- Alan Green, Woodford Green
How is someone on their deathbed meant to be patient?
- Tonyb, Melbourne, Australia
If this was a Conservative manifesto promise which has now been kicked into the long grass, this leaves the government with the only ongoing policy on inheritance tax, doesn't it? Gordon Brown's policy to scrap the tax on estates up to £700,000 is still in place until we hear something to the contrary. Another of George Osborne's ill thought through policies bites the dust.
- Val Daniels, Mijas Costa, Spain
IHT has to be one of the most inequitous taxes ever dreamt up: once you've earned your money and paid income tax on it, what's left over should be yours to do with as you wish, not taxed all over again if you were prudent and invested it in something which retained or improved its value. Although it was originally intended as a spite tax to bring down the old hierarchy of the rich, nowadays it largely affects people who have little beyond the basic comforts of life. It is yet another policy imposed from above which penalises savers and engenders a might-as-well-spend-it-all-whilst-you-can attitude to money.
- Roz, Chamonix, France
You'll believe it when you see it. Its like waiting for Godot, it'll never happen.
- Dhanraj, basildon
A cut in IHT is the best news ever. People will be able to plan their financial affairs with clarity and the cost of collecting IHT will be avoided. Even if they put a £500,000 ceiling on the value of a family home for IHT purposes, it will be an enormous help. The way things are, there are lots of families with grown up children still living in the family home whose lives would be absolutely disrupted if the home had to be sold to pay IHT.
- Patricia, LONDON
