Lib Dems ponder tax plans
Charles Kennedy has ordered a complete rethink of his party’s approach to taxation in an attempt to persuade the electorate that the “economy is safe in our hands.”
Speaking at a breakfast seminar for Liberal Democrat supporters this morning, the Lib Dem leader announced the establishment of a tax commission with the remit to “completely update the party’s policy on tax”.
One of the key planks of the Lib Dems’ general election campaign was to introduce a local income tax, something which some Lib Dem candidates have admitted was unpopular in their areas.
Although the policy is not being abandoned, the policy group is sure to study the issue closely.
The group is being asked to “consider the full range of direct and indirect taxes, including taxation of income, capital and property” and to produce a statement of key principles as well as specific proposals by the 2006 party conference.
The commission will be headed up be former senior civil servant Michael Williams.
Speaking this morning, Mr Kennedy said: “Taxation should be fair – based on people’s ability to pay. It should be straightforward and open – so that people see where their money is being spent. Taxation should frame a competitive business environment and it must encourage sustainability, with economic instruments used to deliver public policy objectives.”
He said this was a liberal approach to taxation which would offer a real alterative to Labour’s approach of “complication, stealth and short-termism”.
Mr Kennedy added: “In order to challenge for power at the next election, the Liberal Democrats must demonstrate over this Parliament that the economy will be safe in our hands. To maintain that credibility, the carefully costed plans we laid out at the election will necessarily be updated, taking account of the direction of the economy and the requirements of society.
Issues highlighted include tax simplicity, with the tax credit system coming in for criticism; fairness, with low earners taken out of the tax net; transparency, with suggestions that taxes could be linked to certain services’ and the level and nature of tax raising power in the regions.
