According to the Chancellor of the Exchequer, George Osborne, inheritance tax should be slashed and is something that only the wealthy should be forced to pay. He made this statement as he gave a hint as to what would be in the manifesto of the Tory party for the upcoming General Election.
It appears as if Osborne is repeating the pledge made in 2010 by the Tory party when it said it would raise the inheritance tax limit to £1 million. However, their plans at that time were foiled as its partner in the coalition government, the Liberal Democrats, blocked the new policy. Osborne also claimed that there were no plans to raise VAT even though the Labour party has claimed this is what the Tories have in mind.
The Death Tax Sting
Inheritance tax has remained in its current form for many years and while it was originally designed to tax the wealthy, it has stung hundreds of thousands of people with relatively modest estates. At present, inheritance tax is charged at 40% for estates worth more than £325,000.
According to Osborne, the Prime Minister David Cameron is in agreement with him that inheritance tax should only affect the wealthy and they intend to set out their approach when the General Election moves into view.
Labour has insisted that Osborne is planning a hike in VAT after the election to pay for the income tax cut the Tory party has promised. The aforementioned cut will cost £7 billion and no plans for funding have been made public at this time.
However, Osborne retaliated by saying it is clear that his plans do not include a VAT increase or any rise in taxes because he believes saving on welfare budgets and cutting public expenditure will raise the cash he needs.
Chris Leslie, the Treasury spokesman for Labour, said the inheritance tax reforms represent another example of the Tories making unfunded promises which will end up leading to tax rises on the working class or cuts in public expenditure. He claimed that Osborne has failed to rule out a VAT rise. Leslie also pointed out that Osborne said the exact same thing regarding VAT before the last election only to increase the tax within weeks of being elected. He concluded by saying Labour will cut taxes for the working class to a lower 10p starting rate and have also outlined how they intend to pay for it.