Deputy Prime Minister Nick Clegg told the Resolution Foundation today that Liberal Democrats will seek to aid those on low and middle incomes by raising the personal income tax threshold further and faster than previously assumed.
Already a significant example of Lib Dems securing fairness through tax reform, the Coalition Agreement set out the Government's intention to make the first £10,000 of income exempt from tax by 2015. Given the continued squeeze on wages that puts family finances on 'boiling point,' Nick clearly set out how he would like the Coalition to lift the threshold sooner, asking "do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?"
In a key passage of the speech, Nick linked the raising of the threshold with ensuring that those at the top of the income scale continue to pay their fair share.
With those at the top claiming the reliefs, enjoying the allowances, hiring other people to find the loopholes, while everyone else pays through the nose. So the Coalition is calling time on our unfair and out-of-whack tax system. We’ve put up Capital Gains Tax, ending the scandal of a hedge fund manager paying less on their shares than their cleaner paid on their wages. We’ve reduced tax breaks on pension funds for the very rich. We’ve clamped down on avoidance and taken steps to raise an extra £7bn through closing the tax gap.These achievements to date may not be sufficient to fund the raising of the income tax threshold to £10,000, so Nick set out further ways in which the Coalition could rebalance the tax system - including the introduction of a General Anti-Avoidance Rule, and wealth taxes to make sure assets are fairly taxed. The Social Liberal Forum welcomes moves to alleviate the squeeze on living standards that the Resolution Foundation recently highlighted. While the economic recovery remains fragile and the cost of living rises faster than incomes, we need a fairer tax system that reflects peoples' ability to pay. As part of the radical changes needed to deliver the fairer economic settlement that Liberal Democrats seek to implement in government, we will continue to press for measures that make the tax system simpler, more transparent and fairer.