George Osborne today insisted the Conservatives would not promise any unfunded tax cuts as the party's tax commission proposed a £21 billion package of cuts.
The review, led by former government minister Lord Forsyth, calls for the ten per cent rate of income tax to be abolished; the basic 22 per cent rate cut to 20 per cent; and the introduction of a new personal tax allowance of £7,185.
It also calls for a simpler tax system, saying there has been an "eye-watering increase in UK tax complexity and instability" under Labour that is damaging the economy.
"High taxes and complexity damage government. The tax system is undermining UK competitiveness and precipitating relative economic decline," the commission says.
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Tory leader David Cameron has previously insisted he would share the proceeds of economic growth between tax cuts and spending on public services, and today's proposals threaten to undermine that pledge.
But speaking at the launch of the report, shadow chancellor Mr Osborne stressed: "We are not going to commit to £21 billion worth of unfunded tax cuts now or in the future."
He said the commission's proposals "merit serious consideration" but stressed: "Sound money means that stability will always come first before promises of tax cuts. We will not be promising upfront, unfunded tax reductions at the next election.
"We will, however, rebalance our tax system. Green taxes on pollution will rise to pay for reductions in family taxes.And we will also embark on a major simplification of business taxes that will pay for a significant reduction in our business tax rates.
"This report represents a major step in that direction. The battle for a simpler, fairer and more competitive tax system has begun."
The commission pours cold water on Mr Osborne's call for a flat tax, saying that although this is "the right direction" it is not right for the UK. However, Lord Forsyth said the system's principles of simplicity, stability and fairness are good aims.
He suggests corporation tax be cut to 25 per cent and over time to 20 per cent, and calls for the abolition of the 0.5 per cent stamp duty on shares. In addition, the commission wants to scrap inheritance tax, to be replaced with short-term capital gains tax on death.
Lord Forsyth said his proposals could be introduced within a single parliament, but stressed the precise timing of their introduction would take account of the "prevailing economic and fiscal conditions and political priorities".
However, Ed Balls, the economic secretary to the Treasury and chancellor Gordon Brown's closest ally, said the proposed tax cuts would not help ordinary families and would leave a black hole in the public finances.
"The scale of the tax cuts is huge. The problem is there is no indication here at all as to how it will be paid for," he said.
"David Cameron has denied he would cut public spending. The hole in the finances that this would create is dangerous for the economy."
Liberal Democrat leader Menzies Campbell warned: "Tory tax plans are in a muddle. You can't produce plans for £21 billion worth of tax cuts without saying how they would be paid for.
"This report makes no mention of green taxation. David Cameron needs to recognise that empty rhetoric is no substitute for concrete proposals."