Hague plan to help high taxpayers

THE CONSERVATIVE Party is preparing to win back crucial Middle England votes at the next election with a pledge to slash the number of people paying the higher rate of income tax.

The party leader William Hague yesterday declared that the 40p tax rate was "not sacrosanct". He said that tackling the higher rate, which is payable on income over pounds 28,000 a year, was a key part of his strategy to offer lower taxes than Labour.

"We will be looking at taxation across the board. The Chancellor always talks about the basic rate of tax but why should the top rate be sacrosanct. It's not sacrosanct," he told a Sunday newspaper.

"I'm not making any detailed commitments on tax at this point, except that the Conservatives will once again be a low tax party, lower than under the Labour Party."

The move is seen by the Conservatives as a means of trumping Gordon Brown following reports that the Chancellor is planning to cut the basic rate of tax from 22p to 20p before the election.

The top rate review is one of a number of proposals being prepared by Francis Maude, the Shadow Chancellor, in time for the party conference in October.

Michael Ancram, the Conservative Party chairman, confirmed yesterday that the intention was to ease the burden on the 2.5 million people who now pay the higher rate.

"In 1979, only half a million people actually paid the top rate. We've now got 2.5 million people paying it, people you wouldn't think of as very wealthy or fat cats, heads, deputy heads in schools, police inspectors, senior registrars, people like that," he told BBC television's Breakfast with Frost programme.

"We're saying we need to look at this to try and see whether we can do something about this rate of tax to leave people with more of their own money in their own pockets."

However, Mr Ancram made it clear that the 40p rate, which has remained unchanged for more than 10 years, may itself not be cut and that the emphasis was more on raising the threshold.

Mr Maude's office agreed that the proposal was likely to involve taking more people out of the top tax bracket by setting it at a higher level than pounds 28,000.

"We want to reduce the top band. This is a Middle England issue. It's about Thatcher's children 10 years on. You don't have to be a millionaire to pay higher rate tax," his spokesman said.

Melanie Johnson, Economic Secretary to the Treasury, derided the Conservative plans as a "hollow joke" which were too vague to be taken seriously.