LibDems to debate tax cuts at conference

By Tim Castle

LONDON (Reuters) - The Liberal Democrats will debate transforming themselves into a party of lower taxation at their autumn conference this month, party officials said on Wednesday.

The proposal could prove controversial for new leader Nick Clegg as it would align the party closer economically to David Cameron's Conservatives, who have promised to "share the proceeds of growth" with taxpayers if they win power.

"We will go into the next election with not just tax cuts for people on low and middle incomes, but net tax cuts overall, and that is a big shift for the party," said LibDem MP and campaigns chief Edward Davey.

He said the party would seek to reallocate 20 billion pounds of public spending if elected to meet LibDem priorities, with any surplus passed on as tax cuts, under proposals to be considered by members at their Bournemouth conference.

Since the party's creation in the late 1980s it has argued for consistent or rising government spending.

But Davey said spending had risen so much under three successive Labour administrations that there was now room for cuts.

Gordon Brown's Labour government set out plans last October to expand spending by 2 percent a year to over 670 billion pounds by the 2010-11 financial year.

The LibDems' seaside meeting will kick off what is expected to be a lively party conference season.