Conservative MPs want tax cuts to 'stimulate confidence' In particular, he said, MPs want to see cuts in corporation tax, capital gains tax and the higher rates of income tax. Economists say that one factor holding back the economy is companies sitting on large piles of cash but not investing. A short-term cut in CGT to perhaps 10 per cent "could release more investment and spending, and may even stimulate more revenue." Coalition policies are also dragging more people into the higher band of tax. The Insitute for Fiscal Studies estimates that 5 million people will pay 40p tax by 2014. Mr Redwood suggested that Mr Osborne should raise the threshold for higher-rate tax, "taking more people out of 40p tax instead of putting more in." The email also suggests that as Mr Osborne tries to balance the budget, he should do more to curtail spending "Colleagues buy into the overriding need to cut the deficit, but think this can best be done with a better balance between a slower rate of growth in public spending and tax rises," Mr Redwood wrote. The email was obtained by Ed Balls, the Labour shadow chancellor, who said it showed that Mr Osborne's plan was "failing," adding "That is why they are all losing confidence." The Chancellor insisted that the Coalition's economic policy is paying off. He said: "We have cut the deficit by a quarter, a million new jobs have been created in the private sector, there is record employment in our economy, record female employment as well, we're rebalancing the British economy from all the problems of the past. Mr Redwood did not return calls seeking comments about his email.