Pressure on Clegg to keep capital gains reform
By Ian Dunt
A left-of-centre Lib Dem group is piling pressure on Nick Clegg to ensure he does not back down on raising capital gains tax.
The proposed changes to capital gains, which would make it roughly equivalent to income tax, have prompted the ire of Tory backbenchers but Mr Clegg is under pressure from his own backbenchers to keep it.
Any watering-down of the commitment would show the coalition government is “weak”, the Social Liberal Forum told the deputy prime minister in a letter.
“If the coalition falters at such an early stage on such a key part of the agreement,” the letter reads, “it will look dangerously weak and will only embolden those who are determined to see it collapse.
“At the very least it must not be contemplated without revisiting the Liberal Democrats’ other manifesto commitments for a mansions tax and restricting tax relief on pensions to the basic rate of income tax.”
The letter marks a distinct push by centre-left Lib Dem elements to ensure their policy agenda does not become victim to the consensus between the right of the Lib Dems and the left of the Tories, which the coalition government informally rests on.
The party’s new deputy leader, Simon Hughes, who is on the left of the Lib Dems, insisted this weekend that the party’s resistance to tuition fees would remain, despite comments last week from David Willetts that seemed to lay the ground for a rise in the fees.
The Social Liberal Forum, which has the support of major Lib Dem players Steve Webb, Tim Farron, Lynne Featherstone and Jenny Willott, also criticised the way the Lib Dems had kept their keystone policy of raising the threshold for income tax to £10,000.
“While the commitment to raising personal allowance has been kept, that overall package has been picked apart by the coalition agreement,” the letter reads.
“Not only does this raise serious questions about how the new policy will be paid for, it means that the policy as it stands will mainly benefit people on above average incomes.”
