Leading Article: The low-tax party no more

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THIS may come to be seen as a pivotal moment in the history of the Conservative Party. At last the Government has admitted that those on average earnings paid less in taxes at the end of the last Labour government than they will from April, when several tax changes come into effect. From 6 April a couple on average male earnings of pounds 19,500 will be losing more of its income to tax and national insurance than in 1978-79. When indirect taxes such as VAT are taken into account, the figures are even worse, with a rise from 27.4 per cent to 31.2 per cent.

So this could be the moment when the Conservative Party loses its cherished reputation as the party of low taxation. It was mistrust of Labour as historically the party of high taxation and profligate government spending that did more than anything to give the Tories their surprise victory in the 1992 election.

Then the Conservative manifesto boasted: 'We are the only party to understand the need for lower taxation'; and much was made of Labour's plan to increase National Insurance contributions - a form of income tax by another name. That is not a claim the Conservatives could decently repeat when the next election is called.

Until now the Labour Party, under both Neil Kinnock and John Smith, has been ineffective in maximising its advantage. In fact, as government figures released yesterday show, taxation has been higher as a proportion of gross domestic product in every year since Margaret Thatcher came to power in 1979 - 1993-94 excepted - than it was under Labour in 1978-79. Since 1992 Labour has been careful not to commit itself to any policies that could lay the party open to renewed accusations of fiscal irresponsibility. But it has some way to go to convince the electorate that it is fully to be trusted - for example, not to waste tax revenues by preserving jobs in dying industries.

For Kenneth Clarke, the present Chancellor, to dismiss as 'piffle' claims that people were better off under Denis Healey is not just silly but dangerous: it shows a reluctance to face up to the evidence and admit that implied promises have not been kept. There is, by contrast, some force in his argument that government spending has been better targeted under the Conservatives than it was under Labour: in the Seventies nationalised industries were swallowing vast sums and giving appalling service to boot.

It could just be that the Government's strategy is cleverer and more far-sighted than anyone, accustomed to its usual level of performance, can believe, and that it is putting up taxes now in order to be able to cut them just before the next election. Conceivably, such cuts combined with low inflation and a still-expanding economy could give the Conservatives yet another victory. If that is indeed the calculation, it can only be said that to risk ditching its reputation as the low-tax party is a gamble of high recklessness. Voters' memories are not that bad.

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