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Tax cuts for the super-rich would be funded by millions on lower pay under plans discussed by Tory policy chief Oliver Letwin.

The senior minister was taped saying the Conservatives would look at a flat tax on earnings, where cleaners pay the same rate as bankers, when Britain’s finances had improved.

The Tories tonight claimed it would never happen, despite it once being championed by George Osborne as a “very exciting idea”.

Comments: David Cameron’s old pal Letwin (
Image:
PA)

But Labour said that after the VAT hike nobody would trust them on tax and that “the real Tory agenda” had been let slip.

Mr Letwin was asked about a flat tax at an event by right-wing think-tank Politeia this month. He said the Chancellor had gone in that direction on corporation tax and suggested it could eventually be applied to income, too.

He said: “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.”

Present income tax

%

PM David Cameron’s pal Mr Letwin was forced into hiding in the 2001 election after letting slip plans for £20billion in spending cuts.

Shadow Chief Treasury Secretary Chris Leslie said of the latest comments: “He’s been caught letting slip what’s on the real Tory agenda for a second term – the idea of a flat tax championed by George Osborne 10 years ago.

“Not content with having already cut taxes for millionaires, a Tory flat tax would mean even lower taxes for the richest and higher taxes for millions of working people.”

The Tories desperately tried to row back from the remarks tonight. A spokesman said: “There will be no flat tax. We oppose it. Full stop.”

But Mr Leslie said: “You can’t trust what the Tories say on tax. They said they had no plans to raise VAT and did it after the election.

"Now they’ve been caught out talking about plans for a flat tax behind closed doors.”

Flat rate needed to raise same amount

31%

According to Institute for Fiscal Studies

The basic flat tax idea is that anyone over the tax-free threshold – £10,000 – pays the same. Currently those on £10,000 to £41,865 pay 20%.

Earnings from £41,866 to £150,000 are taxed at 40% while top earners pay 45% on income over £150,000. The Institute for Fiscal Studies once said a 31% rate for those on more than £10,000 would be needed to raise the same amount as now.

Meanwhile, the Electoral Commission revealed UKIP took almost as much in membership as the Tories last year. UKIP subs soared 63% to £714,492, close to the Tories’ £749,000.

Yet Nigel Farage’s party, which charges £30 a year, has just 32,500 members while the Tories with a fee of £25, claim to have 134,500.