UK opposition woos voters with tax cut pledges

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 Conservatives announced plans to spare millions of families from paying unpopular death duties and said they would help 200,000 people a year on to the housing ladder by exempting most first-time buyers from a tax on property sales.

''In a Conservative Britain, you will not be punished for working hard and saving hard. You will not be penalised for wanting a better life for your children,'' the party's finance spokesman, George Osborne, told the party's annual conference.

He said there were clear choices between the Conservatives and ruling Labour Party that he would be happy to put ''before the British people at a general election''.

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, putting the party on course to win a record fourth consecutive election.

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.

In a speech at Reuters London headquarters today, Brown ruled out any potential pre-election giveaways in this month's spending review, but did promise to stump up the cash for a 16-billion-pound project to build a new rail link across London if businesses played their part too.

DEATH DUTIES For the Conservatives, Osborne's promise that, if elected, they would raise the threshold at which death duties must be paid on estates to 2 million dollars, from 300,000 pounds now, brought cheers from the party faithful.

Soaring house prices in the past decade have sucked many middle-class families into the net for death duties, or inheritance tax. ''In a Conservative Britain, only millionaires will pay death duties,'' Osborne said.

The party is also proposing to exempt first-time home buyers from paying property taxes on houses worth up to 250,000 pounds.

Both measures would be financed through an annual levy of 25,000 pounds a year 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 people who do not have their tax base in Britain has sparked anger.

The government is wary of tightening the rules for fear it could drive away people who have brought in money and expertise.

The threat of a snap poll has forced the Conservatives to rush out policies they could fight an election on.

The Conservatives failed to make much impact with tax-cutting promises at recent elections because Labour accused them of planning to fund them by slashing public services. Now, they are being careful to explain how they will fund tax cuts.

Osborne, favourite to be finance minister if the Conservatives won an election, told the BBC 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.

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

REUTERS SKB BST1824