U.K. citizens can expect income tax cuts should Prime Minister David Cameron's Conservative party win the general election in May. Mr. Cameron said his party will cut income taxes over the next five-year parliamentary term, as long as it can continue its austerity drive to reduce the deficit.
In his final speech at the autumn Conservative conference before voters will make their way to the polls, Mr. Cameron said his party will raise the level where workers start paying income tax to £12,500 ($20,235) per annum from £10,500 next April. They also plan to raise the starting level in the 40% income tax bracket to £50,000 per annum from £41,900.
"We want to cut more of your taxes. But we can only do that if we keep on cutting the deficit. It is common sense-tax cuts need to be paid for," he said. "So here's our plan. We are going to balance the books by 2018, and start putting aside money for the future. To do it we'll need to find £25 billion worth of savings in the first two years of the next parliament. That is a lot of money, but it is doable."
The changes would cost the Treasury £7.2 billion a year.
The economy is likely to take center stage in the 2015 election. The Labour Party, which is leading in the polls, accuses the government's austerity program of creating a "cost of living crisis" after several years of consumer prices rising faster than wages.
However, Conservatives suggest their economic plan is working, citing data that shows unemployment is at a six-year low and the economy is getting back on its feet. The International Monetary Fund indicates the U.K. is on a path to be the strongest growing Group of Seven economies over the next two years.
Mr. Cameron suggests raising the lower rate threshold, also known as the tax-free personal allowance, would take one million people out of paying income tax and would deliver a tax cut to 30 million more.
"So let the message go out: With the Conservatives, if you work hard and do the right thing we say you should keep more of your own money to spend as you choose. That is what our long-term economic plan means for you," Mr. Cameron said.
Source: Winning, Nicholas, & Gross, Jenny, & Bryan-Low, Cassell, "U.K.'s Cameron Promises Tax Cuts If He Wins Second Term," The Wall Street Journal, October 1st, 2014