Axing of inheritance tax is some way off – but much depends on the Tories’ fortunes
Critics call it a death tax, while the Tories’ political opponents would no doubt claim abolishing inheritance tax is a tax cut for millionaires.
Cynics would also claim that raising the prospect of scrapping inheritance tax is something the Conservatives do when they’re facing political difficulty.
The latest floating of the proposal comes just days before the Tories face three by-elections which opinion polls suggest they’re on course to lose.
Funny that. George Osborne pledged to scrap the “death tax” in his speech at the 2014 Tory conference when he was chancellor, immediately after Tory MPs Mark Reckless and Brooks Newmark quit.
As shadow chancellor back in 2007, just after former chancellor Gordon Brown succeeded Tony Blair as prime minister, Mr Osborne also told the Tory conference he’d scrap it.
“We will take the family home out of inheritance tax,” he vowed. “The next Conservative government will raise the inheritance tax threshold to £1 million.”
But it didn’t happen, because the Tories fell short of a majority and were forced to go into coalition with the Liberal Democrats. And these days it’s a nice little earner for the current chancellor, Jeremy Hunt.
We’re not talking imminent legislation or a pre-election Budget giveaway. This is one – potentially – for the manifesto, in a bid to win back those disgruntled Tory voters in the shires and the so-called “blue wall”.
And the official response from Number 10 has been lukewarm, to say the least. It’s “future-scoping speculation”, Number 10 told Sky News, and “requires a different kind of economic environment to the one we’re operating in”.
In other words, the government can’t afford a £7bn tax cut right now and the priority is halving inflation. In fact, as Mr Hunt never tires of pointing out, this isn’t the right time for any type of tax cuts.
But try telling that to those Conservative MPs demanding them, such as former chancellor Nadhim Zahawi – who was sacked from the cabinet amid controversy over his own tax affairs – who last month denounced it as “morally wrong” and a “spectre that haunts us alongside death”.
However, it’s claimed more than 50 Conservative MPs back the demand and it’s a key proposal of the new Conservative Growth Group, made up of allies of former prime minister Liz Truss, including Jacob Rees-Mogg and Priti Patel.
But let’s not get ahead of ourselves. Yes, abolishing inheritance is a widely debated issue. But it’s also hotly disputed. And as Number 10 have made clear, it’s not the government’s priority right now.
It’s also likely to have limited appeal in the “red wall”. But if the Tories are still languishing in the opinion polls it could find its way into the manifesto in a bid for votes in the battle for the “blue wall”.