Davis: bolstering his right-wing reputation?

David Davis has reignited the party's tax row by saying the Tories should emulate George W Bush's spending cuts.

The shadow deputy prime minister claimed that the forthcoming rise in national insurance contributions was a tax on jobs and pay.

Davis told a meeting of Republicans Abroad that "whatever gain is achieved by increasing government spending can be lost within four or five years" and that Conservatives were "morally" compelled to lower the tax burden.

He said that rather than increasing taxes at this time, Britain should look to emulate the Bush administration and cut taxes in order to boost the economy.

"The chancellor openly plans to increase the tax burden as a share of national income every year until 2007-8," he said.

"Britain is reverting to a high-tax economy at precisely the time when most European countries are cutting their public spending so as to become more competitive."

Davis said prosperity and growth would come only through low tax and low regulation.

He praised president Bush's "enlightened low-tax, high-growth policy" and risked Labour charges of a Tory cuts agenda by lauding the benefits of a low-spending regime.

"Low taxes motivate individuals, companies and nations to succeed," he said.

"The classic example of low spending and low taxes generating high growth and new jobs is of course America.

Shadow chancellor Michael Howard has refused to commit an incoming Conservative government to immediate tax cuts, saying that matching Labour spending on health and education will be the first priority.

Other Tory right-wingers, led by Davis, believe the party should put more distance between themselves and Labour and seek to capitalise on public disenchantment with services that are failing to be improved despite more money.

"We remain a party which passionately believes in low taxes and which does so as a matter of principle," he said.

"That principle is moral. It is morally right that people should keep as much of what they earn as is compatible with government doing those few things which it alone can do."