Crockart: Liberal Democrats have recalibrated the tax system in favour of low and middle income earners

Edinburgh West MP Mike Crockart has been poring through tax data and has concluded that Liberal Democrats have successfully recalibrated the tax system so that low and middle earners are paying less tax and big companies are paying more tax. He cites figures which show that tax collected from low and middle income earners has fallen from £3170 million to £2720 million over the last 4 years at the same time as £16 billion more was collected over the last two years from larger companies as a result of HM Revenue and Customs’ enforcement activity.

He said:

Liberal Democrats in the UK Government have recalibrated the UK’s tax system in favour of low and middle earners and against large companies who aggressively evade taxes. Through turning the tables on them and pursuing a ruthless clampdown on tax evasion we’ve returned £16 bn to the UK’s coffers.

At the same time, these figures show that low and middle earners have seen real changes to their pay packets since 2011. Over 2 million people in Scotland have received a tax cut and 262,000 have been lifted out of paying any income tax altogether. So this is positive change which delivers a stronger economy through stamping out tax evasion and a fairer society by ensuring people keep more of what they earn.

You simply can’t trust Ed Miliband and Ed Balls with the economy. In Government by themselves Labour would borrow too much, risking the economy.  While the Conservatives would cut too much, threatening public services and sacrificing the poorest.

The SNP refused to back the low paid. Their white paper proposed low and middle earners would pay £450 more than under the Lib Dem plans.

It’s certainly a step forward, although there is much more that needs to be done. The last thing we need is a Conservative majority government reversing all the good that we have done and, for example, cutting Capital Gains Tax, which was raised at our insistence in Osborne’s first budget.

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17 Comments

  • Are there any Liberal Democrats who think everybody should pay a little more tax (and some should pay a lot more) to fund public services and state investment in essential infrastructure so that we all benefit?

  • Aren’t these figures a bit of a hotch potch? You can’t compare tax paid by less well off citizens with that paid by larger companies.

    The relevant and clinching comparison would be how much the less well off are paying relative to top rate taxpayers. Labour claims we have given top rate taxpayers a £3bn tax cut. Is this true and if so, where are the figures to back it up?

  • Tony Dawson 4th Jan '15 - 10:01am

    “You simply can’t trust Ed Miliband and Ed Balls with the economy. In Government by themselves Labour would borrow too much, risking the economy. While the Conservatives would cut too much, threatening public services and sacrificing the poorest.”

    There is nothing wrong with the CONTENT of this paragraph but everything wrong with the presentation.

    You simply cannot trust Cameron and Osborne with the economy, either. In fact, why single out ‘the economy’. You cannot trust Tories, period, which is how they have spent the past four years skewering the Lib Dems only for Cameron to dismiss us completely this morning. You have to show your criticism of the Tories in an equally forceful way, not remember to come up with almost as an afterthought at the end.

  • @g
    “Are there any Liberal Democrats who think everybody should pay a little more tax (and some should pay a lot more) to fund public services and state investment in essential infrastructure so that we all benefit?”

    Yes, I do as a matter of fact. It is actually the only honest approach to this debate about how we maintain public services while cutting the deficit: asking most people to pay more.

    But try asking most voters to impose higher taxes on themselves rather than on some ill defined group of “other people” and they generally run a mile.

  • RC basically sums it up!

  • Tsar Nicolas 4th Jan '15 - 12:22pm

    RC

    Cutting the deficit during a recession/depression is foolish and futile.

    Don’t believe there’s a recession/depression? Look at the catastrophic fall in the oil price.

  • Malcolm Todd 4th Jan '15 - 12:53pm

    Tsar Nicholas
    Well, it’s not quite as simple as that, is it?
    http://www.vox.com/2014/12/16/7401705/oil-prices-falling

  • Mark Inskip 4th Jan '15 - 1:11pm

    It would be good to have some data to support the claim “Labour claims we have given top rate taxpayers a £3bn tax cut.”

    There was the reduction on the top rate of tax from 50% to 45% which the Tories pushed through, but whether you look at the HMRC or IFS analysis, increasing it back to 50% will only raise a few £100M, certainly no where near £3bn.

    But top rate tax payers have been hit in other ways:
    1. Under Labour a top rate tax payer could get tax relief on £255,000 of pensions contributions a year. That figure has been reduced to £40,000 under this government
    2. Under Labour Capital Gains Tax for top and higher rate tax payers had been cut to 18%, but this was increased by this government to 28%
    Both of these will have more than offset the saving from top rate reduction.

  • Is Tsar Nicholas really a Russian (oil oligarch?) Tsar? Why else claim that the fall in oil prices is “catastrophic”?

    I think lower oil prices will help the western economies.

  • RC 4th Jan ’15 – 11:04am
    “Are there any Liberal Democrats who think everybody should pay a little more tax (and some should pay a lot more) to fund public services and state investment in essential infrastructure so that we all benefit?”

    RC – I agree with you both that it is desirable and also that it is the honest approach.

    it is profoundly dishonest for people like Laws to say one minute that he wants to cut the state to Victorian levels of expendiure and then three months before the election to pretend that he is not exactly the same as the worst Tories. He publishes a book saying he wants to replace the NHS with some free-market system of health care but pretends he supports the NHS. Again profoundly dishonest.

    I disagree with you about the views of the voters. Paddy Ashdown used to talk about ‘hypothecation ‘ ie linking particular expenditure to particular taxes. The Treasury of course has a blue fit at such suggestions because it would remove “flexibility” from the Mandarins and the establishment interests that they serve. But the voters respond warmly to such suggestions, hence the popularity of the ‘penny on income tax for schools’ policy. When that was Liberal Democrat policy we increased the number of our MPs from 22 to 65. Since the Orange Book our number of MPs has gone down and is due to be cut in half in May because the voters do not want the dogma of Marshall Laws.

  • David Evershed 4th Jan '15 - 4:38pm

    These are the good times for people in the UK.

    Improved worldwide communication and transport means the UK is in competition with China, India, Indonesia and other countries where pay and conditions are much lower than here but talent equally abundant.

    Whilst the pay and conditions of other countries is rising, we are still paying ourselves too much in many industries and uncompetitive. The widening trade deficit shows we are becoming less competitive.

    Over time our pay will converge with that of people in China, India, Indonesia and so on. In turn this has consequences for government revenues which will fall in real terms.

    Politicians need to start lowering people’s expectations for the standard of living in the UK but are reluctant to do so. Instead, to try to get re-elected, all parties promise more government spending and less taxation plus milk and honey.

    Happy New Year 🙂

  • Dr Michael Taylor 4th Jan '15 - 5:13pm

    John Tilley is of course totally fixated on a book, in which a variety of views was published (including an article by a man most of us prefer not to mention now since he resigned and went to prison), which predates quite a lot of what Tilley is trying to say. His obsession that our party is dominated by proponents of this book (which has in any event been ‘bigged up’ by the endless repetition of what is basically a lie) is an insult to many of our MPs and ministers most of whom didn’t feature in what was a rather boring book.

    Tilley should realise that Goebbels was right in one important respect. If you repeat a lie over and over again, people start to believe it.

    Come off it Tilley. The record is scratched and broken and you need a new tune.

  • The link embedded in the article is dead, I’ve been unable to readily locate any further detail behind these claims – although in other Libdem postings of this news item it is claimed the figures are contained in written answers to Parliamentary Questions, hence I would presume are in the public domain and publishable. However, what is published does seem to differ from what is published here. For example

    “The additional tax revenues collected from compliance activities by HM Revenue and Customs for each year since May 2010 is as follows.

    Year , Outturns (£bn)

    2010/11* , 13.9
    2011/12 , 18.6
    2012/13 , 20.7
    2013/14 , 23.9
    2014/15 , 26 (target)

    [source: http://www.theyworkforyou.com/wrans/?id=2014-12-08.217680.h&s=speaker%3A24794#g217680.q0 ]

    Interestingly these figures indicate just how little tax revenue (PAYE & NI?) is actually contributed by “low and middle earners” (what ever these labels actually mean).

    With respect to g’s question, there are probably two factors firstly how the bread-and-butter/”situation normal” tax bill is distributed and then whether we should then add tax (eg. 1%) on top to create funds to be targeted specific needs/projects. However, as we’ve seen with NI we need to be very careful to ensure that such additional and targeted funding doesn’t simply over time get subsumed into the general tax take. Perhaps this is were the National Lottery approach to funding actually has a roll to play, and hence the additional tax gets removed from the Treasury’s account and placed at arms length, and is controlled by a publicly accountable body.

  • Re:
    It would be good to have some data to support the claim “Labour claims we have given top rate taxpayers a £3bn tax cut.”

    There was the reduction on the top rate of tax from 50% to 45% which the Tories pushed through, but whether you look at the HMRC or IFS analysis, increasing it back to 50% will only raise a few £100M
    (Mark Inskip 4th Jan ’15 – 1:11pm)

    I seem to remember that the HMRC/IFS analysis also showed that by reducing the top rate from 50% resulted in a net increase in tax revenues, as it made may tax avoidance schemes less attractive to an increasing number of individual top rate payers earning below £1m…

  • Now, Lets reform the local government tax system.
    Replace council (property) tax with local income tax for main occupied residence.
    People will then pay local taxes according to their income – that will be a tax cut to low earners!
    Absent owners or 2nd home owners will then continue be taxed on property.
    Simple reform.
    Is it still LD policy ? We want to see progress.

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