Tag Archives: income tax

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

photos by: st_u_art & st_u_art
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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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Danny Alexander MP writes… This is the Liberal Democrats’ policy and everybody knows it

The Conservatives may claim to be the party of hardworking people. But the same cannot be said for their policy wonks. According to today’s Financial Times, the Conservatives are apparently considering a proposal for their manifesto to increase the personal allowance to £12,500. An almost identical idea to our own policy of raising the personal allowance to the minimum wage that we first passed in our spring conference of 2012 and reaffirmed just one month ago at our Autumn conference in Glasgow. Once again, it is the Liberal Democrats who are shaping the future of the British tax system.

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Opinion: Rewarding marriage – with less than the cost of the cake…

There must be better ways for Liberals to support families that the marriage tax allowance.

Politics has always been about compromise and pragmatism and in a coalition Government we are seeing the impact of this in a very public and often painful way. For every moment of joy there are two where I want to bury my head in my hands and weep for the future of liberalism.Don't Judge

Whether we like it or not the coalition agreement set out a commitment to introducing a married couples’ tax allowance. I don’t know what the logic was at the time for agreeing such an obviously un-liberal and expensive gesture. I hope that what we gained outweighs the feeling of nausea that this policy gives me.

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“We cannot afford it” – Cameron on raising income tax threshold to £10k. In 2010.

With a hat-tip to Ed Stradling, here’s a reminder of what David Cameron told Nick Clegg about raising the income tax threshold in the first leaders’ debate:


(Watch it on YouTube here.)

I think it’s fair to say the Tories have since had a change of heart. Apparently it was their idea all the time:

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IFS verdict: Labour’s 10p tax idea “has no plausible economic justification”

institute-for-fiscal-studies-logo-370x229Ed Miliband’s announcement yesterday that Labour will re-introduce a 10p starting rate of income tax paid for through the introduction of Vince Cable’s mansion tax has received a tepid response from the Institute for Fiscal Studies. The IFS put out a note yesterday headed simply, Better options exist to help low earners than 10p tax rate:

A 10p tax rate would reduce taxes for those on low incomes and strengthen their work incentives. A far simpler and more sensible way of achieving these aims would be to spend the same

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Lynne Featherstone writes… Three Lib Dem policies really stand out for me in 2012

International Development minister Lynne Featherstone writes a monthly column for one of her local newspapers. Here is the latest one…

What a year 2012 has been! There are three Lib Dem policies that really stand out for me this year: the Pupil Premium, income tax reductions for low paid and middle income workers and equal marriage.

Before entering Government, the Lib Dems knew there were serious social mobility problems in the UK. Only one in five young people from the poorest families achieve five good GCSEs compared to three out of four from the richest families. Through the …

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Danny Alexander: Your money, back where it belongs, in your pocket

Posted in Lib Dem TV | Also tagged | 3 Comments

Opinion: This graph of income tax rates might surprise you

If this graph seems confusing, it’s because it accurately describes taxation of income in the UK. What alternative can Lib Dems offer? I think there are four key problems and solutions.

  • Firstly, while the personal allowance is rising (to £9,205 next year), the National Insurance thresholds lag behind. As I’ve written previously, raising these is more progressive and, so, equalising the thresholds and the allowance must be the priority before going beyond £10,000.

  • Then there’s the withdrawal of the

Posted in Op-eds | 28 Comments

Labour put down tax amendment that would have given Tories tax cut they want – which Lib Dems stopped

I realise that Parliamentary shenanigans and point scoring isn’t everybody’s cup of tea, but it’s worth pointing out that Labour today squandered a relatively good position going into the first PMQs of the new Parliamentary term. Ed Miliband had an open goal ahead of him given controversy over the pensioners’ tax allowance,  “pasty tax” and charity tax relief yet he and his strategists still managed to misunderstand parliamentary procedure to a ludicrous extent. He’s just lucky that more excitable members of the Tory benches didn’t take their chance to have some fun.

Miliband looked not to Labour big hitters of the …

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Opinion: What message would scrapping the 50p rate send?

The rumour mill is turning at an alarming rate about next week’s budget- the grapevine is whispering that the 50p rate is about to be scrapped, and less than a week after Liberal Democrat spring Conference voted for this:

“Conference resolves that the wealthy and those with the very highest incomes should make the greatest proportionate contribution to the tax measures necessary for the reduction of the structural budget deficit and that the Additional Income Tax Rate of 50% on the top 1% of earners is needed to achieve this.”

Fairer taxes, one of our four key manifesto pledges supposedly delivered in the CSR, will mean …

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Tim Farron gives party members a sneak preview of tomorrow’s Party Political Broadcast

Party President Tim Farron has emailed Lib Dem members with an exclusive preview of tomorrow night’s Party Political Broadcast, with a reminder to sign the petition to fast track the Lib Dem £10,000 income tax threshold policy:

The Liberal Democrats want to give tax cuts to millions not millionaires – to put more money back in your pockets and take the poorest workers out of tax completely.

Tomorrow night you’ll have the chance to see a party political broadcast about our plans to do this.

In the meantime you can do two things:

Watch an exclusive preview of the broadcast:

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Clegg’s call for income tax cuts for the low paid is welcome, but will the Tories back him?

It’s no secret that Nick Clegg is personally very committed to the Lib Dem – and now coalition – policy of raising the threshold at which people begin to pay income tax. It was one of the first big policies he argued for at conference after becoming leader, and was a key message during the 2010 election campaign. Clegg returned to the theme this morning, though, to call for the implementation of the policy to be speeded up.

Personally I think this intervention is very welcome, not only because the policy is a good and liberal thing in itself, but …

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How big business got the 50p tax rate wrong

From the Financial Times:

Fears that the 50p rate of tax would hinder recruitment of top executives have been allayed, according to a survey of 50 large companies that will relieve pressure on George Osborne to accelerate plans to abolish the controversial levy in next week’s autumn statement.

Only 13 per cent reported that the 50p rate for those earning more than £150,000 a year was proving a barrier to attracting senior managers to Britain, according to KPMG, the professional services group, in what it said was a “dramatic change of sentiment” since 2009 when over 80 per cent of companies

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LibLink: Nick Thornsby – A simple change to the tax system could ease Britain’s economic woes

Over on Comment is free, Nick Thornsby is arguing for income tax cuts:

Political leaders in the eurozone must sort out their problems – and there is finally some hope on that front. When it comes to inflation, while George Osborne’s options to tackle the problem itself may be limited, he can certainly take action to negate its effects on the people on whom it impacts most severely. One of the most effective things he could do is to let those on low and middle incomes keep more of the money they earn. The coalition agreement already commits the government to

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What Liberal Democrat members think of different tax policies

Lib 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. Some 550 party members responded, and we’re currently publishing the full results.

Cut income tax and VAT but raise taxes on property: that’s the message from Liberal Democrat party members in our latest survey. Some answers to our tax questions are unsurprising, such as the North Korean style (or, for older readers, the Albanian style) majority in favour of raising the personal allowance threshold for income tax to £12,500, approximately equivalent to what a …

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Demonstrating how the Lib Dem policy of raising income tax thresholds IS an irrefutably progressive step

Another week, another attack on Lib Dem tax plans. This one comes from Kayte Lawton, Senior Research Fellow at the IPPR, whose publication on Coalition Tax Policy concludes that raising income tax thresholds is regressive in its impact.

What do terms like ‘regressive’ or ‘progressive’ mean? Quantitatively, it’s a little difficult to define: we’re not talking about a single number, but about a distribution – the shape of a graph. If we consider net gains to an individual and order our data by income percentile, then a progressive distribution of gains would slope down from left to right; if we’re …

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Opinion: Now is NOT the time to abolish 50p tax rate

A letter appeared in the FT today from a deficit* of economists which suggested that the 50p tax rate be dropped. Their reasoning, as was stated on yesterday morning’s Radio4 Today programme is that hedge funds are relocating to Switzerland in favour of the cheaper tax. While I assume if the tax was dropped the 0.5% of the population in the UK who actually pay that level wouldn’t contemplate leaving?

Having worked with hedge funds I recognised a few of the names, such as Sushil Wadhwani, listed in the BBC article as former Monetary Policy Committee (MPC) member. In other …

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Danny Alexander suggests £12,500 income tax threshold

Danny Alexander MP has argued in an interview in this week’s New Statesman magazine that he would like to “push further” eventually on raising the income tax threshold higher than the planned £10,000.

Here’s an excerpt from the interview, published in the Staggers:

From the Treasury perspective, the main Lib Dem contribution to government has been the plan to raise the income-tax threshold to £10,000 by the end of the parliament. Alexander is very attached to this policy as a way of compensating people on low incomes for the cuts. “I think it’s a direction that we will want to

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Opinion: Time for that Lib Dem tax cut in full?

“Under a Liberal Democrat government, you will not have to pay any income tax on the first £10,000 you earn.”

So said the manifesto on which we fought last year’s election. And while we didn’t get a Liberal Democrat government, we did get the policy.

The coalition agreement commits the government to making real terms steps each year towards the target of £10,000, kicked off by an initial increase of £1000, benefiting the low paid by £200 this year.

But should we be moving faster?

Recent economic growth has, of course, been weaker than expected – no surprise given the circumstances. The events of …

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Nick Clegg’s delivery diary

Nick Clegg’s article in the Indy today is a spare, evidential piece, as neatly sliced and lacking in rhetoric as an appointment diary.

But what a diary. Flip back a year, and Gordon was driving to the Palace to call the General Election, as the Liberal Democrats prepared to launch their manifesto.

Now, Nick writes,

…something is happening that, for the Liberal Democrats, is a new experience: the policies we championed during the election are becoming reality. I don’t mean that consultations are being announced, votes held, or papers published. Over the next few days, lives will be changed for

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Two major tax reforms the government should see through

There’s been some promising chatter in the run up to next week’s Budget about two major changes to our tax system, both of which have often been talked about across the political spectrum and both of which politicians have previously ended up shying away from because of the political hurdles involved.

First is integrating income tax and national insurance. As The Independent reported,

The move is expected to be signalled by George Osborne in his Budget next Wednesday. Although such a huge change would take years to implement, the Chancellor is determined to be seen as a reformer and not just

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LibLink: David Laws – Tax cuts for the rich can wait. Tax reform can’t

In today’s Times, David Laws, Liberal Democrat MP for Yeovil and former Chief Secretary to the Treasury , argues that the coalition must live with increased taxes on the rich as part of its deficit-reduction programme, but that reforming Britain’s complex and unfair tax system must be undertaken in earnest. Here’s an excerpt:

Under the last Labour Government tax policy was characterised, in the words of the Institute for Fiscal Studies, by “drift, punctuated by poorly thought-out changes”. A 10p in the pound rate of income tax was introduced and abolished. National insurance changes were made for political, not economic, reasons.

Posted in LibLink | Also tagged | 29 Comments

LDV readers say: Tax Capital Gains and Income at the same level

LDV posed the question last month (even before the Osborne/Alexander austerity emergency budget): Do you believe that as a matter of principle capital gains should generally be taxed at the same level as income?

Here’s what you told us:

    68% (946 votes) – Yes
    27% (371) – No
    6% (80) – Don’t know
    Total Votes: 1397, Poll ran: 10th June – 31st July, 2010

If you missed it at the time, it’s well worth having a read of the comments thread.

Posted in Voice polls | Also tagged | 11 Comments

Did you know that two-thirds of people don’t pay income tax?

No, I didn’t either.

But that’s what Polly Toynbee says:

… it does nothing for the 62% of adults who earn too little to pay tax.

Oh hang on, what’s this Lord Bonkers is saying?

It’s not that 62 per cent of people don’t pay tax, it’s that 62 per cent do pay tax.

How out of touch with the lives of ordinary people do you have to be to make a mistake like that and not spot it? It hardly encourages you to have faith in Toynbee’s judgement as a columnist.

You think someone at the Guardian would have spotted it though.

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Lord Tebbit’s praise for the Lib Dems’ tax plans

In his blog post in today’s Daily Telegraph Lord Tebbit asks, “Why won’t the two main parties do anything about the madness of taxing the poor?’.

“And I hate to say it, but only one party leader seems to have grasped that, if you construct a system where unskilled people are worse off by taking a job than by staying on welfare, they remain trapped in poverty – and that is Nick Clegg.

Posted in News | Also tagged , and | 33 Comments
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