In a speech today, Conservative leader David Cameron also called for the tax allowance for pensioners to be raised by £2,000.
Cameron urged the Government to introduce its proposals in this year’s Budget in order to promote a culture of “thrift” and “saving”.
He called Labour’s recession policies “economically stupid and morally indefensible” arguing they will prolong the debt crisis leaving future generations to pay the price.
Cameron said: “In order to help deal with Labour’s debt crisis and help turn Britain from a spend, spend, spend society into a save, save, save society it is time to abolish income tax on savings for everyone on the basic rate of tax, with top rate taxpayers continuing to pay the same and it is time to raise the tax allowance for pensioners by £2,000.”
But Liberal Democrat leader Nick Clegg has branded the proposals a “fake giveaway”.
He says: “Gordon Brown and David Cameron are con-men trying to fool the British public.
“First we have an expensive VAT cut that doesn’t help people and now the Prime Minister announces he will create 100,000 jobs without any idea of how.
“David Cameron is offering his own fake giveaway. Cutting savings tax will mean someone saving £100 will only get an extra 40p a year.
He adds: “If David Cameron is going to be taken seriously he has to identify what cuts he will make. How many fewer police officers will there be on the street and who will have a smaller pension?
“The Liberal Democrats are the only party with a detailed plan on how to put Britain on a green road out of recession. We have set out how we would make big, permanent and fair tax cuts, giving £1,000 in income tax cuts to families on average incomes.”