Tax cuts of up to £30 billion are feasible during the course of the next parliament, a think tank has suggested.

And reducing taxes would provide a powerful incentive to cutting "hugely wasteful" public spending, said a Centre for Policy Studies report.

The call follows Michael Howard's pledge that a Conservative government would only cut taxes if it can be afforded.

In the pamphlet, published on Friday, Lord Blackwell argues that the current debate on taxes should be reversed.

The peer, who was head of John Major's policy unit from 1995 to 1997, argues that "much of the debate on tax starts by taking the current tax burden as a given".

"The question most often asked is whether or not the government of the day can afford to reduce taxes," he said.

"This approach is the wrong way round. High levels of taxation are damaging not only in their own right - for the impact they have on incomes and incentives - but also because of the high levels of state activity and expenditure that they enable to be funded.

"An overlarge public sector acts as a break on wealth creation by sucking resources into public sector employment where productivity growth is dismally low; and by sucking resources out of investment and growth in wealth creating enterprises.

"Furthermore all the evidence suggests that, on the margin, a high level of state spending is hugely wasteful."

Lord Blackwell writes that "the argument should not be about whether we can afford to reduce taxes, but about how we discipline state spending to match the tax levels we can afford".

Among the proposals put forward are raising the income tax threshold to £7,500, increasing personal ISA allowances to £20,000 and abolishing inheritance tax.

The programme of tax cuts can be funded by reducing the growth in state spending, the report suggests.

"Growing public spending by 0.5 per cent less than GDP over five years would open up scope for tax reductions of between £25 billion and £30 billion," says Lord Blackwell.

"Given the scope for savings in waste and inefficiency in current expenditure, this should be a minimum target."