Balls said he favoured a VAT cut but, if that isn’t approved, he also suggested a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.
No tax cut could mean “a permanent dent in our nation’s prosperity”, he said.
He told BBC One’s The Andrew Marr Show the current austerity measures were “self defeating” and had left Chancellor George Osborne claiming he was “trapped by the credit rating agencies”.
“We’ve got to get growth back in the economy,” he told the programme.
Writing in the Sunday Times, Balls said: “Some people may be surprised to see Labour prioritising tax cuts. But in a crisis there is a premium on what works effectively and quickly to get our economy moving.”
He said that such a cut should be funded by borrowing, not more spending cuts.
However, Conservative deputy chairman Michael Fallon told BBC One’s Sunday Politics that Balls had not learned “from his time as Gordon Brown’s right-hand man”.
He said Labour was responsible for the country’s debt pile and all tax cuts had to be funded or there would be “billions of pounds of more borrowing and more debt”.
