In his last conference speech before the general election in 2015, David Cameron has vowed to deliver tax cuts for 30 million people in Britain by 2016.
His proposed measures will ensure income tax will not have to be paid by anyone on the national minimum wage and will lift the tax-free allowance from £10,500 to £12,500.
There will also be an increase to the 40p tax rate – from £41,000 to £50,000.
In his speech declaring his reasons for these promises, Cameron said he wanted people in Britain to have “the chance of a job, a home, a good start in life, whoever you are, wherever you’re from.”
He added: “I want to take action that’s long overdue and bring back some fairness to tax.”
If the Conservative Party win next year’s election and the tax cuts are implemented, the Treasury expects the basic-rate tax payer would pay £500 less in tax by 2020.
In addition, people earning between £50,000 and £100,000 a year would pay a significant £1,313 less.
Although millions of families and minimum wage workers will greatly benefit from these cuts – which Cameron hopes will balance the economy – the Treasury fears they will cost the Government around £7.2billion.
Just last week the chancellor stated that a further £25billion will need to be cut from public spending to help eliminate the nation’s deficit, and George Osbourne’s predicted savings from freezing benefit payments will not be enough to make up for the £7.2billion loss.
Paul Johnson, of the Institute for Fiscal Studies (IFS) said of the tax cuts: “It will be really important to understand how this will be paid for.”