Richard Baum

Liberal Democrat Leader, Nick Clegg today called for tax cuts for low and middle-income earners after a decade of tax hikes and unprecedented public spending rises.

During a speech to the Policy Exchange think-tank, Nick Clegg set out Lib Dem plans for radical and effective changes to the tax system that are will make Britain a fairer place where taxpayers’ money is spent more efficiently:
 

Nick Clegg criticised Labour for years of tax rises:

“Over the course of eleven years of the Labour Government, we have seen National Insurance bumped up, Council Tax sky rocketing, stamp duty quadrupled, dozens of minor stealth taxes imposed, and now the 10p rate of income tax doubled.

“It is ludicrous that the poorest people still pay a higher proportion of their income in tax than the richest do. It is an immoral use of excessive taxation on those who can afford it least.

“Excessive tax can do enormous damage - especially to the poorest families, whose power in our society is already so limited. That is why the Liberal Democrats will focus all our attention on cutting taxes - from the bottom.

“The most disturbing development is the Prime Minister’s penchant for surprise tax changes. It’s a tombola tax system. Gordon Brown treats tax like Forrest Gump treats a box of chocolates - you never know what you’re going to get. 

Nick Clegg said that the Tory plans were ill thought-out and not right for the country: 

“David Cameron cannot credibly argue that he wants to cuts taxes and improve public services unless he says how - he has asked us to trust him but why on earth should we?

“Tory tax policies are all smoke and mirrors, striking postures whilst ducking all the tough choices.

“He has cried crocodile tears for the millions who lose out from this income tax hike. Crocodile tears because he has no policies to help the people who are suffering.”

Instead of Labour tax rises and Conservative bluff, Nick Clegg set out the Liberal Democrat vision for a fairer, greener tax system: 

“We already have a radical tax package, cutting the basic rate of income tax to just 16p, to make work really pay for everyone.  And scrapping the unfair council tax, which hurts the poorest the most.
 
“Council Tax bills have more than doubled since Labour came to power, and the poorest pensioners pay four times as high a percentage of their income than the richest working people.
 
“Removing this unfair tax and replacing it with a fair local income tax will massively shift the tax burden away from the poor – and take many people on the lowest incomes out of tax altogether – those who don’t pay income tax but are hit by the council tax. It’s absolutely vital that we make these tax changes if we want to make work pay.
 
“At the moment, for every pound you earn over and above six thousand, at least 31p is lost in tax and National Insurance. 
But for many, because of the loss of tax credits and means tested benefits like Council Tax benefit, much more is lost. 1.8 million people face an effective tax rate of more than 60%.  For the worst affected, the tax rate can be 90p in every pound. And almost all of them are low earners.
 
“The moment you add in the cost of childcare – or travel to work – for far too many people work is just not a viable option.
 So these tax cuts are at the heart of the Liberal Democrat plans.
 
“And we will make up the money by taxing pollution and reforming capital gains tax and pensions tax relief.Switching over £8bn of taxation from income to pollution is and will continue to be one of the corner stones of Liberal Democrat tax policy.
 
“The other two parties’ environmental credentials will not stand up to closer inspection unless they are prepared to use green taxes to change behaviour.  
 
Mr Clegg re-affirmed the Lib Dem commitment to get tough on tax avoidance both by businesses and individuals.
 
“It is unacceptable that someone on the minimum wage can pay 31% tax when some of the very richest people and businesses can pay virtually no tax at all. We must stop the drive from companies who decide to locate “virtually” offshore.
“The UK has much to offer, good communications, a skilled worked force and a desirable place to live. If a company is attracted by these things it must also pay UK tax.
 
“A Liberal Democrat Government would have a very simple rule. If your company is based in the UK, you pay tax in the UK - not Jersey or the Cayman Islands.
 
“Too many top companies and prosperous people in Britain now see no shame in aggressive tax avoidance. It may, strictly speaking, be legal but it lets down millions of hardworking ordinary taxpayers.
 
“So over the coming months, we will work with financial experts and business to find ways to make tax avoidance so difficult it is no longer worth trying.
 
“I want to send a clear message to businesses and some very wealthy people that tax is not optional.”

Nick Clegg’s message is clear - the Lib Dems have fully costed and radical tax plans that are markedly different, fairer and greener than what is on offer from Labour and the Tories.

Rick