Tories play down talk of tax hikes after General Election

Conservative Party sources have told Sky News there has been "no decision yet" on whether there could be tax increases after the 8 June General Election.

Chancellor Philip Hammond suggested at an International Monetary Fund meeting in Washington that the Conservatives may abandon a 2015 election pledge not to raise income tax, National Insurance or VAT.

He said the vows made at the time of the last General Election "constrained" the Government's ability to manage the economy effectively and that he needed more "flexibility".

Mr Hammond also stressed he had "no ideological desire to raise taxes".

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But after Labour accused the Tories of planning a "tax bombshell", party officials insisted they were still to decide whether to include the pledge in their manifesto.

After his debut Budget last month, the Chancellor was forced to make a U-turn on plans to increase National Insurance for millions of self-employed people because it breached a promise made by David Cameron's campaign two years ago.

The reversal left Mr Hammond with a headache, as the 2% rise to Class 4 National Insurance contributions was meant to raise £2bn for social care.

In 2015, the Tories had pledged to cut income tax for 30 million people - taking those who earn less than £12,500 out of income tax altogether through increases to personal allowances.

Mr Cameron's administration had also vowed to increase the 40p tax threshold so that those who earn less than £50,000 a year would only pay the basic 20p rate of income tax.

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The issue is likely to be raised as the parties begin their first weekend of election campaigning, with the leaders likely to meeting voters today.

The director of the Institute for Fiscal Studies has previously said it would be unwise for a Chancellor to tie their hands by pledging not to increase taxes.

Sky (Frankfurt: 893517 - news) 's Business Presenter, Ian King, said: "The Government essentially has four main levers it can pull in terms of raising taxes: income tax, national insurance, VAT and corporation tax.

"The Government is committed to lowering corporation taxes to ensure the UK economy remains competitive and an attractive investment destination, so that leaves the other three taxes that George Osborne pledged not to raise the rates on."