David Cameron unveils tax cut pledge

Emma Haslett
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The Liberal Democrats have also laid claim to the policy (Source: Getty)

Is this the beginning of the end of Austerity Britain? The Prime Minister has unveiled plans to cut taxes for the lowest earners, saying there is an "economic, moral and practical" case for lowering taxes.

At a speech in Eastleigh, David Cameron unveiled plans to raise the annual personal allowance to £12,500, saying "I think people know how to spend their money better than those in Westminster do”.

Cameron has form when it comes to this: when he came to office in 2010, the point before which earners don't pay tax on their income was £6,475. In 2014-15, it will be £10,500.

But Cameron's party isn't the only one to come up with the idea. The Liberal Democrats have also promised to raise the personal allowance to £12,500. They've even claimed it was their idea in the first place.

Jonathan Isaby, chief executive of campaigning organisation The Taxpayers' Alliance (TPA), gave the plans a cautious welcome.

The Prime Minister is right to commit to lowering taxes on hard-working people and all leaders should be looking to make similar pledges.

However, he added that the top rate of tax must be raised.

Cameron's commitments aren't quite as generous as they first seem: he is not planning to raise the 40p threshold quickly enough to keep pace with inflaiton and, while a further increase in the personal allowance would be welcome, he has said nothing about what he would do with National Insurance which is a second income tax in all but name.

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