PM defies party calls to cut tax for middle-earners

PRIME Minister David Cameron has resisted pressure in his own party to cut tax for middle- and lower-earners until the government has tackled the deficit.

Despite heavy lobbying from senior figures including London mayor Boris Johnson, Mr Cameron said that he wanted to offer people "relief", but suggested that would only be possible "at the end of this hard road".

The refusal to look at a "plan B" has led to Labour repeating claims that the government is not producing a fair economic strategy as it claims, but squeezing lower- and middle-income earners.

Mr Cameron's comments come after figures revealed almost 50,000 people in Scotland will be dragged into paying the higher tax rate of 40 per cent in April because the government has lowered the income threshold for when it applies.

The coalition has also been criticised for increasing VAT from 17.5 per cent to 20 per cent and raising fuel duty.

But over the weekend Mr Cameron insisted there was no "Plan B" on the coalition's deficit-reduction strategy and said tax cuts would only undo the work of painful curbs in public spending.

"I would love to see tax reductions. I'm a tax-cutting Tory and I believe in tax cuts, but when you're borrowing 11 per cent of your GDP, it's not possible to make significant net tax cuts. It just isn't," he said.

"It's no good saying we're going to deal with the deficit by cutting spending, but then we're going to make things worse again by cutting taxes. I'm afraid it doesn't add up."

Labour's shadow chief secretary to the Treasury Angela Eagle called on the government to repeat Labour's bank bonus tax to raise 3.5 billion that could be used to support growth and jobs to take the pressure of low and middle earners.

She said: "Families feeling the squeeze from deep spending cuts and the VAT rise this year should know that the Conservative-led government made a political choice to reduce the deficit in this way."