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Parties bicker over tax plan claims

The Conservatives and Labour have been forced to fend off rival claims about their future tax plans.

The Tories strongly denied that they were planning to move to a "flat tax" system - where everyone pays the same rate of tax regardless of income - after the party's policy chief Oliver Letwin was recorded suggesting a discussion "will no doubt open up" when the public finances improved.

And Labour rejected claims that it had revived proposals for a 15% "death tax" after a recording of shadow health secretary Andy Burnham emerged in which he apparently suggested that would be the "best way" of funding social care.

Mr Letwin's comments, made at an event by right-wing think-tank Politeia earlier this month were reported by the Daily Mirror.

He was quoted by the paper as saying that while a move to a flat tax system was not feasible at the current time, given the state of the public finances, it could be possible in future.

"In 2010, indeed now, we were not in a position to take a large fiscal cut. There may come a time when the situation is different and that discussion will no doubt open up," he was quoted as saying.

A Conservative Party spokesman said: "There will be no flat tax. We oppose it. Full stop."

Labour was equally adamant in its denial after The Daily Telegraph reported Mr Burnham's remarks made to the Fabian Summer Conference last month.

In response to a questions as to whether a tax on estates was being actively considered by Labour, Mr Burnham was quoted as saying: "I still think the best way to do it is to go for the solution that you discussed (tax on estates) but there is a debate to be had on whether that is acceptable to the public."

A Labour Party spokesman said: "This is not Labour policy. We have made clear we want to improve social care and we are consulting on how that is best done."

Shadow chancellor Ed Balls said a flat rate would be a "massive" tax rise for working people and pointed out that Chancellor George Osborne has said it is an exciting idea.

Mr Balls was referencing comments Mr Osborne made in 2005 when he reportedly said a flat tax was a "very exciting idea" and commissioned an investigation into the system in some former Soviet states.

The Chancellor at the time said that flat tax need not be regressive, as most systems that operated it had high personal allowances.

Mr Balls told BBC Radio 4's Today programme: "George Osborne said it was an exciting idea to have a flat tax. That would mean cutting the top rate to 31% and a massive tax rise for working people.

"All I'm saying to you is a Labour government will not do that.

"(The Tories) are obviously thinking of it."

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