Lib Dems in radical tax U-turn
The Liberal Democrats would tax the rich and polluters to pay for huge tax cuts for the majority, under new proposals.
The party has today published the results of a year-long study by its tax commission, revealing policies that are both radical and a massive departure from its previous “signature policies”.
In recent years the Lib Dems’ tax plans have at various times centred on a new 50 pence higher rate of tax for people earning more than £100,000, a penny on income tax to fund education, and axing council tax.
Following the release of their new policies this morning, only axing council tax survives.
“The current system of taxation is not fair,” said Lib Dem treasury spokesman Vince Cable.
“The bottom 20 per cent of households pay proportionately more of their income in tax than the richest 20 per cent. There has also been a marked increase in wealth inequality since Labour came to power.”
To remedy this the Lib Dems are proposing cutting the basic rate of income tax by two per cent; raising the income needed to pay higher-rate tax to £50,000 removing 1.3 million people from the top band; raising the nil-tax threshold by around £2,500 to £7,185; and raising national insurance thresholds in line with income tax.
This will lift two million people on low income out of tax, the party calculates.
To find the £20 billion needed to pay for this, the party intends to increase taxes on aviation, polluting cars, and the rich.
Pensions benefits for the rich would be reformed, capital gains tax relief cut, and loopholes closed.
The Lib Dems also plan to cut industrial subsidies, scrap the ID card scheme, the child trust fund, Eurofighter, and the plan to build more nuclear power stations.
Mr Cable acknowledged that it was a “very ambitious package”, adding: “We’re confident that the numbers add up.”
He accepted that as a result flying would become more expensive – but this was not necessarily a bad thing as it tended to be the better-off that made the most use of aviation.
“The Lib Dems have radical proposals to produce fairer, simpler taxes which also help the environment,” Mr Cable concluded.
“Most families would pay considerably less income tax, they would also no longer have to pay council tax, which is very painful and very unfair for millions of families and also pensioners.”
