Major on defensive over Tories' taxation record

JOHN MAJOR sought yesterday to ride out attacks on the last two tax- raising Budgets as he insisted that the Conservatives were still the party of the lowest 'possible' taxation.

He added in his new year message that it was time to 'put the pessimists in their box' and look forward with confidence to a steady growth in prosperity.

But the Prime Minister's decision to brass out the criticism in an at-times defensive message was coupled with a frank admission that taxation had risen under his leadership, while he placed a fresh gloss on Conservative election manifesto pledges.

'I want a recovery that lasts,' he said. 'To do that, we have to bring the books back into balance. And that has meant having to do two things - cutting spending and raising revenue. Our over-riding objective, as we explained in our manifesto, must be sound finances.'

Figures supplied by the Treasury yesterday confirm that the overall burden of taxation has increased under the Tories, despite the dramatic tax-cutting that occurred during the Thatcher years.

An upbeat message on the economy - 'stronger-than-expected growth combined with lower-than- expected inflation' - contrasted with a warning from John Smith, the Labour leader, that 1994 would be the year of higher taxes, damaging the recovery, and more Government waste.

While not ruling out further tax rises, Mr Major insisted that the Conservatives remained the party of the lowest 'possible' tax, the party of low income tax which had not put up income tax rates, and the only party whose 'instinct' was to cut tax.

Kenneth Clarke, the Chancellor, admitted to the Treasury select committee last month that measures in the last two budgets were equivalent to a 7p in the pound rise in the rate of tax or pounds 9 a week in pay packets.

The Treasury figures show that the proportion of earnings paid in direct and indirect taxation and National Insurance Contributions by a married man with a non-earning wife and two children has risen from 32.2 per cent of salary in 1978- 79 to 35.1 per cent in 1994-95.

In a message highlighting the 95 per cent of households that would be affected by higher taxation in the coming year, Mr Smith said: 'The effect can only be to weaken recovery and undermine confidence at an extremely critical time.'

Meanwhile, he said, the Government was spending taxpayers' money on unnecessary reforms, with millions of pounds being wasted on increased bureaucracy and large managerial salaries in the NHS alone.

Mr Major's message, taking the form of a letter to all Conservative constituency chairmen, emphasised that Britain was set to top the European growth league in 1994 and that unemployment had recently fallen by nearly 90,000.

'It is time for us to be more confident as a country. To put the pessimists in their box. And to look at the opportunities before us and how to take them,' he said, reasserting back-to-basics themes of crackdowns on crime, 'fashionable attitudes' and liberal education.