Welcoming the findings of the report, the Shadow Chancellor re-iterated his central commitment to sound money - stressing again that economic stability come before promises of tax cuts. He made it clear that the report is not a blueprint for the Party's next election manifesto.
Business tax reform
However, he said he shared the Commission's central conclusion that if Britain is to remain a prosperous nation enjoying high living stands, then tax reform is urgently required.. Mr Osborne said he was 'particularly impressed' with proposal on business tax reform, and declared that 'there is a strong case for a major simplification of business taxes that would pay for a significant reduction in our business tax rates'.
Fifteen of the 40 recommendations focused on reforming business taxation. They are (with intial revenue effect in £m in parenthesis):
The Shadow Chancellor announced that accountancy firm PriceWaterhouseCoopers is to conduct a detailed study of how to implement a simpler business tax regime, while former Conservative Chancellor Lord Howe is to head up a small group which will study potential reforms in the way tax law is made, to ensure proper scrutiny and consultation in advance of change.
He said: "I also agree with the Commission that we need a more intelligent analysis of the effects of tax cuts and tax increases on our economy, and I will look to establish a dynamic model of the economy within a Conservative Treasury, running alongside the existing static model. We will never risk the public finances on an untested model, but we will examine how the model performs in government and if it proves to be a success then it will help inform our future tax policy."
Personal taxes
Mr Osborne also welcomed the Report's conclusions on the need to reduce personal taxes on families. He said: "I believe lower and simpler taxes encourage aspiration and opportunity, and help people take more responsibility for their own lives. That is why I want to share the proceeds of growth between spending on public services and lower taxes. So I will give serious consideration to the proposals to reduce and simplify personal and capital taxes."
But he stressed: "These options almost all come with a price tag. I have already made it clear that for this party Sound Money means that economic stability comes first. And the Report itself says that "economic and fiscal conditions" must be taken into account. We are not going to commit to £21 billion of unfunded tax cuts now or in the future.
"However, we will rebalance our tax system and shift the burden from taxing families and jobs to taxing pollution and carbon emissions. I want to tax the bad not the good.
"Britain's tax system is too complicated. This is damaging Britain's ability to compete in the world. I set up the Tax Reform Commission to get, for the first time ever, independent expert advice on how we can change that. I commend its work and I welcome its Report. The Commission have given us a menu of options that merit serious consideration. Some we will accept, some we will modify and others we may reject. But the framework of our tax policy is now set."
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Susie Hughes © Hardhatter 2006
The Editor