LONDON (Reuters) - British Prime Minister David Cameron’s Conservatives on Sunday pledged to cut inheritance tax so it became a levy only for “the rich” as they sought to woo pensioners and property-owners before a close national election in four months.
George Osborne, the Conservative finance minister, gave his strongest signal yet he would reduce the tax — also known as death duties — saying he would set out plans before the May 7 election to make the system fairer.
“I have taken steps to help with inheritance, making sure that people can pass on their pension to their children,” Osborne told The Sunday Times newspaper in an interview.
“David Cameron has made it clear, as have I, that we believe inheritance tax is a tax that should be paid by the rich and we will set out our further approach closer to the election.”
Inheritance tax has become increasingly unpopular with many Britons as rising property prices, particularly in London, mean a greater proportion of people are liable to pay it.
The Conservatives are keen to portray themselves as tax cutters and the rival opposition Labour party as big borrowers and spenders, a charge the left-wing party, which is narrowly ahead in most opinion polls, rejects.
The Conservatives have promised to deliver more than seven billion pounds of other tax cuts if elected on May 7, though they have not yet explained how they would be funded at the same time as the country is paying down a large budget deficit.
On Sunday, Osborne also ruled out any rise in value added tax if his party wins the next election.
Before the last election, in 2010, the Conservatives promised to raise the threshold at which the 40 percent inheritance tax on estates starts being paid to one million pounds ($1.52 million) from its current level of 325,000 pounds.
There is an effective threshold of 650,000 pounds for married couples at the moment.
But Cameron failed to win an outright majority in 2010 and was forced to enter a two-party coalition with the centre-left Liberal Democrats who blocked his plans.
Proposals to cut inheritance tax are certain to appear in the Conservatives’ pre-election manifesto amid suggestions they may pledge to raise the threshold to two million pounds.
Osborne will deliver the final budget of this parliament on March 18. His party’s coalition with the Liberal Democrats and Britain’s sizeable national debts means his room for manoeuvre will be limited.
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Editing by Stephen Powell