We inherited a system in 2010 where a cleaner would pay a higher marginal rate of tax on his income at 20%, than a hedge fund manager would on her income converted to capital gains at 18%. Decades of Conservative and Labour governments alike saw the progressive tax system diluted, as reliefs and loopholes multiplied, and more and more burden was placed on the most regressive taxes such as council tax and the sin taxes.
Increasing the personal allowance is the most powerful way to start to put this right. A few hundred pounds may be useful to a middle income earner, but will make all the difference to someone struggling to get by on low pay.
And with limits to reliefs, the increase in the rate of CGT and other measures, IFS figures clearly show the top 10% of earners making the biggest contribution, not just in cash terms but in percentage terms too.
This rebalancing of the tax system would be a great achievement at the best of times, but to deliver it during the austerity imposed by Labour having “spent all the money”, and in coalition with the Conservatives who are widely considered to be more sympathetic to the rich, is something to be especially proud of.
And so we campaign today to take it further.
* Joe Otten is the Liberal Democrat candidate for Sheffield Central