Tag Archives: income tax

Willie Rennie announces Scottish zero rate tax plan

Last night in his annual speech to the David Hume Institute, Willie Rennie set out plans for a plan to help low and middle income Scottish earners by introducing a zero rate band of tax to go beyond the raising of the tax threshold. Because he’s also announced a plan to raise income tax by 1p to secure a £475 million investment in education, this new tax plan is going to be revenue neutral.

Both Liberal Democrats and Labour have announced plans for a 1p rise in income tax. However, Liberal Democrats are focusing on what you would get for it – more college places, reversing education cuts, a pupil premium and more nursery education. Labour’s is so complex that everyone is talking about the tax part of it. Fair play to both, though, for actually trying to use the powers we have.

Under Willie’s zero rate plan, Liberal Democrats would build on our record in government when we increased the personal allowance by over £4,000, helping to lift more people on lower incomes out of tax. Tax revenues gained by investing in education and boosting business by closing the skills gap would create a zero-rate tax band.

Willie  contrasted the progressive Liberal Democrat proposals with George Osborne’s commitment to increase the Higher Rate threshold from £43,000 to £50,000 by 2020, giving record-breaking tax cuts to the richest and costing Scotland £400m.

He said:

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The graph which shows why the Lib Dem policy of raising the personal allowance is the wrong priority

Here’s a graph which should make Lib Dems who continue to advocate increasing the personal allowance as an effective way to help low- and middle-income earners sit up and pay attention.

It’s from the Resolution Foundation’s report, Missing the target: tax cuts and low to middle income Britain, published yesterday.

What it shows is which households gain from the party’s policy to increase the threshold at which income tax is payable to £12,500 over the course of the next parliament. As you can see, those households which benefit most are at the wealthier end of the spectrum; the poorest 20% benefit least.

res fdn tax cuts lib dem graph 1

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Lib Dems pledge more tax cuts: after personal allowance raised to £12.5k will also increase National Insurance threshold

Danny Alexander by Paul WalterToday’s big announcement from the Lib Dems has been the “plan to cut your tax bill further”. Here’s how The Guardian reports it:

The Liberal Democrats are to burnish their credentials as the tax-cutting party for the low paid by floating the possibility of cutting national insurance contributions for anyone earning below £12,500 a year.

In a challenge to David Cameron, who is facing pressure from Tory MPs to pledge bold tax cuts as the economy grows, the Lib Dems will promise in their general election manifesto to raise the level at which workers start to pay national insurance contributions.

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What Lib Dem members think about top-rate tax: 53% back 50p (or higher) BUT only if it raises more revenue

Project 365 114 - MoneyLib Dem Voice has polled our members-only forum  to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. More than 830 party members responded – thank you – and we’re publishing the full results.

53% support 50p (or higher) top-rate of tax; 31% say stick at 45p; 13% back 40p (or lower)

Currently the top rate of income tax is 45p in the pound for earnings over £150,000. Which rate do you support this top rate being set

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Memo to both Left and Right: Income Tax isn’t the only tax that matters

There was some leftie love showered on this ConservativeHome article by Peter Franklin this week: Right-wingers should stop boasting about how much income tax the rich pay. His point was absolutely right, as he laid into the supposedly slam-dunk argument glibly tossed around by unthinking capitalist Tories like Boris:

The richest one per cent of Britons contribute 30 per cent of all the Income Tax collected in this country. This, supposedly, is a ‘killer fact’ – deployed with devastating complacency by the free-market right: Rising inequality? No need to worry about that! The rich are kindly paying your taxes for

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Opinion: More money in your pocket from April

MoneyAt the last election, Liberal Democrats up and down the country campaigned hard to cut taxes for working people and put money back in your pocket. It was our top priority – taken from the front page of our manifesto – to increase the amount you can earn before paying tax to £10,000. This has made a real difference to taxpayers up and down the country.

Since 2003, middle wages have failed to rise with growth. When we came into government, someone working full time on the minimum wage would lose …

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Opinion: In defence of consumption taxes

MoneyWhenever the “cost of living” comes up as a topic, we often hear lists of consumption taxes that can be reduced to lower it. Most recently have been the green levies on energy bills; last year a big deal was made about fuel duty; the year before it was the top rate of VAT.  Some people even argue that taxes on cigarettes and alcohol hit the poorest and should be cut back.

I’m certain that there’s all sorts of taxes that we’d like to lower, but there’s no such thing as a free lunch, and any tax we lower requires us to raise another tax or cut spending elsewhere. Wealth taxes, and even a high rate of land value tax, would only raise so much, so if we’re to cut tax then we’re going to have prioritise.

My position is: whichever consumption tax you’d like to reduce, we’d be better off using the revenue to raise the Income Tax and Employee NI thresholds. This is for three reasons:

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