Taxcutting is like supporting a football team. You have to believe in it within your soul. It's part of your political being. Unfortunately for most Liberal Democrats raising taxes is part of their political gene makeup and most voters know that. They remember the 1p on income tax "for education". They remember the spending commitments that would have bankrupted the country. They remember the
50p income tax rate. So although the LibDems will want to concentrate on the
headline of "2p off income tax" (are they suggesting 2p in the Pound off the
education budget?) it's the other measures which ought to be examined in minute
detail, as they will dramatically increase the tax burden on the middle classes
- just the sort of people the LibDems need to keep hold of (and attract) if they
are to repel the Cameroonian advances.
Today, the LibDems have announced yet another round of tax proposals, which include an apparently mouthwatering 4p cut in income tax (on top of their original 2p proposal, which was adopted by Gordon Brown in his March budget). But again, this is a revenue neutral package. They say that any household earning less than £68,000 will benefit. Let's take a closer look...
The main proposal is a 4p income tax cut to be paid for by "green taxes on cars and flights and the ending of £13.5bn of tax breaks for high earners would fund the cuts". As yet I have been unable to find any detail on what these tax breaks for high earners consist of. Sir Menzies Campbell said: "Tax cuts for the majority will be paid for by the wealthy minority." This is the politics of envy. As Lincoln said, you don't make the poor rich by making the rich poor. Many of the people Ming wants to tax until the pips squeak are the wealth generators of this country. They provide the jobs which pay for the benefits he wishes to increase. Let's look at some of the other measures...
Reaffirming the party's commitment to replacing the council tax with a "local income tax"
I'm unclear whether this move has been included in their calculation that any household earning less than £68,000 will be better off. This was a clear vote loser for the LibDems in the south of England last time and many LibDem activists are nervous about retaining it as a policy.
Removing "tax loopholes exploited by the super-rich"
Reducing stamp duty paid on properties worth less than £500,000
And what about those over £500,000? It is licensed robbery for the Treasury to take a 4% cut.
Raising the starting threshold for inheritance tax to £500,000
A welcome start, but most LibDems I know would like IHT to be increased rather than cut
Return business rates to local control
This is a difficult one. In theory I agree with this and if you believe in localism you ought to be firmly in favour. And yet, and yet, I know the damage business rates can do to small businesses. Whatever its faults, the UBR has provided a degree of stability.
Simplify the tax code to remove more than 500 pages of regulations
All in favour of that
Bringing money made on UK property by people who are not resident in the UK, within capital gains tax
I'm not really qualified to comment on this, but my gut feeling is that it sets a dangerous precedent.
This is an interesting set of proposals, but on first sight at least, it doesn't provide the information needed to make a rational judgement. The full paper can be read HERE. Perhaps someone could point me to the section which details the £13.5 billion of tax breaks for the wealthy which will be abolished, because I am damned if I can find it.