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George Osborne today put off the promised cut in inheritance tax under the Tories for three years or more.
The shadow chancellor said his flagship pledge would come "later in the Parliament", adding: "The first priority is dealing with the debt."
It came as he appealed to the country to give him a clear mandate at the election to carry out tough £23billion spending cuts outlined in his speech to the Tory conference, including a pay freeze for nurses, teachers and police. He claimed he would rather lose the election than win by making promises he could not keep.
"If you won an election in the current economic climate on a false prospectus then it wouldn't be worth governing, because you would become so distrusted, so unpopular, so quickly that you wouldn't actually be able to take the country through the economic change that is necessary," he said.
He insisted repeatedly: "Whoever wins this election is going to have to take some very difficult decisions, but I would rather people knew that before the election than after the election.
"What I said to people yesterday was the blunt truth. We have to get a grip on this."
He said he was not aware his slogan - "We are all in this together" - repeated seven times in yesterday's speech, was the title of a song from the Disney hit film High School Musical. "My daughter is six years old and we have not yet gone through the decade of High School Musical," he said. "I just thought it summed up the challenge."
Mr Osborne stressed that both rich and poor must pay towards reducing the debt, which was why he would not axe the 50p tax rate on high earners of £150,000 until the squeeze was over.
But Labour said the Tories wanted "to hit hard-working people in their fifties and still cut inheritance tax for millionaires' estates". Unions warned of industrial action if the cuts package was implemented.
Reader views (11)
Richard,
Thanks for your comments too. However, I respectfully disagree that there is no difference in principle between the estate tax and other forms of taxation.
If you're living in a country, earning a living, there are certain services that the government provides that make it easier to do so: the national infrastructure, the police, the judiciary, the defence force, etc. I can see how, since my income would be less without those things, it is reasonable for the government to ask for a share of my earnings. That's fine.
On the other hand, once the government has taken its share of my income, surely that should be it?
If I buy a house, I can understand why I'd need to pay a bit of ground rent every year - the government spends a bit on protecting the house, with policemen, firemen, etc., and it's fair that I should pay for those services. If the value of the house goes up, it's fair that I should pay capital gains tax, since at least a part of the increase is due to economic development that the government had a hand in.
But when I die, exactly what services are the government providing that make it possible for me to transfer ownership of the house to my children? If there was no government, what would get in the way of the transfer?
Of course, if I was a waster who blew all my cash on mindless consumption, I'd avoid the tax. Is that fair?
Look, I get that the estate tax is desirable. I know it prevents all manner of social ills. I'm just not sure that it's moral.
- Neil, London
David,
Thanks for your response, but I'm afraid I don't find it convincing. You seem to use the words "fairness" and "justice" as though they mean the same thing.
I would like to live in a fair world, where everyone gets the same start in life and succeeds or fails according to their own merits. But let's say we had that - it would take only one generation before some people had more than others, and some kids were being born to wealthy parents and others to poor. Now, it might be "fair" to equalise things again for the next generation, but to do that would be to undo all of the work done by the successful parents, which strikes me as massively unjust.
Apartheid was evil because there was deliberate action taken to prevent a group from getting access to education, training and employment that they would otherwise have been able to get. In the absence of apartheid, black people would have been better off. In the absence of an estate tax, poor children would still inherit nothing.
Surely you recognise that there's a huge moral difference between inactivity in the face of unequal outcomes and activity that causes them? It's the difference between being a witness to a crime and being the perpetrator. Though again that metaphor's not apt, since one could hardly describe coming into an inheritance as a criminal activity!
So I'm still not sold. Has anyone else got a better moral justification?
- Neil, London
Neil, London. Estate or inheritance tax is no different from any other tax in principle. The state has some purpose. We can debate exactly but security and defence must for example be in there. So the state raises money to meet the costs they incur. There are lots of potential sources each with their own merits and disadvantages.
If you know you will encounter large estate tax and various avoidance's have been well plugged by the state then you can benefit your children by putting that money into education for them, paying for character building experiences (a modern day version of the "grand tour"), by investing in health and so on. There are many ways you can spend to benefit your children without waiting til you are dead. But the point is if they do not take on board the education, the character building and so on then they can't just fall back on the money they inherit. It would real shake things up to all our benefit.
- Richard, Cheltenham
LETS MAKE IT QUITE CLEAR. IF THE TORIES BACK TRACK ON REFORMING INHERITANCE TAX I WIL NOT BE VOTING FOR THEM IT IS A FUNDAMENTAL RIGHT TO HELP ONES FAMILY. .
- Alan Green, England. The forgotten country.
Mr Cameron, don't worry about the % of this and that , everybody knows that the future is very difficult.All that the voters need to know is that you really understand the difficulties of the people who are paying the taxes. If they don't get that message then God alone
knows what will happen. True blue, be lucky!
- Bruce Hastings, France Roquebrune-Cap-Martin
Neil,
The moral justification for estate tax could be something like this:
I am born to my parents through no responsibility of my own. That I have the parents I do rather than others is not down to any merit of mine, but brute luck. It is therefore morally arbitrary.
Compare something like Apartheid in South Africa- what was unjust about such a system? Surely that it singled something completely arbitrary as a pattern for distribution - people with white skin had more rights than those with black skin, even though there is no relevant difference, seeing as we do not choose our skin colour.
Likewise, given we do not choose to whom we are born, it is unfair that some people, through no merit of their own, are born into huge sums of money, while others are not. Inheritance is therefore unjust: it is injust that some people, through nothing but sheer luck of being born to the families they are born into, are advantaged over others who have less fortune in the natural lottery.
If this is the case, then justice requires wither heavy taxation to ameliorate this injustice, or perhaps even abolition of inheritance if you want to go all the way.
- David Marjoribanks, Canterbury
While I agree in principle with Richard's idea that each generation should have to fend for itself, I have a bit of a philosophical problem with the estate tax. Can someone help me out here: By what right do we tell a parent who has saved for a lifetime (and paid taxes on the income along the way) that they are not entitled to leave their estate to whomever they choose? By what right do we step in and claim a share?
I mean this as a serious question: Can someone please tell me what the moral justification for the estate tax is?
I understand that we don't want new aristocracies forming because of inherited wealth. I'm just not sure "we don't want it" is a good enough reason, and I'd appreciate a better one.
- Neil, London
These are crackpots these tories. anybody who knows anything about the national debt will know that you've really gotta do what american presidents lincoln and kennedy attempted to do, and that was put the central bank out of business. Take advantage of the fact we have a fiat currency by issuing treasury notes at NO cost to the public instead of these "bank of england notes" I can completely understand why a uber socialist like gordon brown won't do this but a "conservative" like david cameron has NO excuse for not doing so. Unless he's concerned about meeting the same fate as those two other brave souls who took on the bankers and ultimately lost. There are going to be people who laugh at this suggestion and that's ok because they'll love living as debt slaves to these parasites who fraudulently call themselves the bank of england.
- Simon Lomax, warrington, cheshire
Reality is that whoever wins(or would it really be loses) the next election will have some tough calls to make.The priority is to get Britain back to work and the public finances on a sound footing. Forget Europe at the moment that is of relatively little importance you can't feed a family on waffle. The only way to ensure another Labour admin. is to vote UKIP instead of Tory and split the Tory vote, not a good idea.
- Gorbie, girona spain
Quite right to. If he wants a really enterprising Britain with dynamic people and businesses,with more of a meritocracy then RAISE it considerably above a threshold of say £250,000. That way each generation has to largely fend for itself and succeed on their own merit. It would focus the minds of the most able.
- Richard, Cheltenham
Public sector workers will have to take a pay freeze, my son lost 10% of his wage so he could keep his job so what is the problem with public sector workers then. To keep jobs you have to make sacrifices. Labour has caused the debt problem and it is the British people who have to suffer because of their greed.
- Frances, Leics
