UK opposition, on election alert, pledges tax cuts

BLACKPOOL, England, Oct 1 (Reuters) Britain's opposition Conservatives, on alert for an early general election, promised voter-pleasing tax cuts today and pledged to fund them with a levy on wealthy foreigners who pay little tax in Britain.

The promises are part of a Conservative attempt to reverse their sliding poll ratings, which have tempted Prime Minister Gordon Brown to consider calling a snap election.

One opinion poll at the weekend put Brown's Labour Party 11 points ahead of the Conservatives, who are trying to woo voters by rushing out new policies at their annual conference in the northern seaside resort of Blackpool this week.

Political commentators think Brown, who took over from Tony Blair in June, could announce as early as next week that he is calling a snap election for late October or early November to try to win an unprecedented fourth term for Labour.

The Conservatives, led by David Cameron, say they are ready for an early election but some analysts think their best hope is to put on a strong performance this week that would dissuade Brown from going to the polls now.

Conservative economics spokesman George Osborne told BBC radio that, if elected, his party would cut death duties.

Death duties, or inheritance tax, are deeply unpopular in Britain because rising house prices have pushed many families into paying them when the owners die. Currently, estates are taxed above 300,000 pounds (609,000 dollars).

RICH FOREIGNERS TO PAY Osborne said he would raise that threshold but did not say by how much. He said a Conservative government would pay for the measure through a levy on rich foreigners living in Britain who pay no tax on their overseas income.

Wealthy foreigners such as Chelsea football club owner Roman Abramovich and steel magnate Lakshmi Mittal have flocked to London, but the relatively small amount of tax paid by such people who do not have their tax base in Britain has sparked some anger.

The government is wary of tightening the rules for fear it could drive away people who have brought money and expertise to London's financial centre.

Osborne said his party based its calculations on a cautious estimate of 150,000 ''non-domiciled'' residents, many working in financial services, who would have the option of paying a flat 25,000 pounds a year charge or paying British tax.

He said many were American citizens who would be able to set the levy against their US tax bill. ''They personally won't be out of pocket,'' Osborne said, adding that he did not think the move would drive many out of Britain.

The Conservatives also pledged to help first-time home buyers by exempting them from a tax on the sale of properties worth up to 250,000 pounds. The levy on wealthy foreigners would also pay for that measure, Osborne said.

Osborne, favourite to be finance minister if the Conservatives won an election, said he had ''complete confidence'' in Bank of England Governor Mervyn King, who has been criticised over his handling of mortgage lender Northern Rock, which suffered Britain's first bank run in a century last month.

If he was finance minister, he would recommend reappointing King, whose five-year term ends next June, he said. But he said that, after King, future governors should be appointed to ''single, long, non-renewable terms''.

REUTERS SKB KN1642