George Osborne, the shadow chancellor, on Friday paved the way for tax rises under a Conservative government while warning against a “tax con” short-term cut by Gordon Brown.
The Tories fear that the prime minister is using the recession to prepare a toxic financial legacy for an incoming David Cameron premiership after a June 2010 election.
The opposition party also worries that Mr Brown may woo voters with short-term giveaways that will leave the Tories with harsh tax and spending choices for their next manifesto.
On Friday, Mr Osborne mounted a counter-attack, seeking to redefine the political dividing lines over the economy in ways that place the onus on Labour to account for the future state of the public finances.
In a speech to the London School of Economics, the shadow chancellor warned that the choice of “borrowing without limit” that Mr Brown “appears to be making” would hit taxpayers in the medium term.
“It means damaging tax rises at the very moment when you want to be reducing taxes to help the recovery,” he said.
In a coded warning about potential tax giveaways in the next Budget, Mr Osborne said that that the prime minister may try “another 10p-style tax con where he tries to fool people again”.
The Tories back the government’s basic approach of increasing borrowing to absorb the impact of the recession while bringing forward spending on capital projects within the existing agreed limits. But they worry Mr Brown may go further than this.
Such fears were fuelled by hints from the chancellor on Thursday that the emphasis at present was on easing the financial pressures on voters.
“I really do think that at this time, what you really do not want to do is to be taking the money out of people’s pockets, especially at this time when a lot of people are really struggling to make ends meet,” Alistair Darling told GMTV.
“I want to help people – that’s one of the reasons of course why I reduced the amount of tax that basic rate taxpayers pay. It’s very, very important.”
The chancellor refused to rule out tax rises. Asked if Labour would repeat its manifesto commitment not to raise income tax rates, Mr Darling would say only that the “next manifesto, you know, we’ll publish that before the next election”.
The chancellor has committed himself to setting out in next month’s pre-Budget report how the government intends to bring spending and borrowing back to sustainable levels in the medium term. “What you’ve got to do is spend the money …support the economy now, but you do need to make ends meet in the long run – you’ve got to live within your means,” he said.
Mr Darling accused the Tories of being “all over the place” on their proposals to deal with the downturn, telling MPs Mr Osborne “has not a clue about how to deal with this problem”.
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