Over at The Independent today, Lib Dem secretary of state for business, skills and innovation Vince Cable declares unequivocally that he will be trying to convince the Liberal Democrat conference that the Coalition’s austerity programme of cuts are right and will be fair. Here’s an excerpt:
What will matter for my party and the country at large is whether fiscal discipline and wider reforms are carried through in a spirit of fairness. Within a few months, some key steps have been taken in that direction. The first has been to lift income tax thresholds, taking low earners out of tax and cutting direct taxes for those on low and middle incomes. The state pension, which was allowed to wither under Conservative and Labour governments, has been linked to earnings. Tax avoidance via low capital gains tax has been curbed. It is my department’s responsibility to ensure that higher graduate contributions are more progressive: related to graduate earnings. A key test of our proposed radical and overdue reforms of the welfare system is that they are fair, providing protection for the vulnerable as well as incentives to work for those who can.
The spirit of my own party conference will, I predict, be upbeat with a sense of satisfaction about what has been achieved. But I expect searching questioning and a few brickbats. That is the way we are.
You can read Vince’s article in full here.
16 Comments
Why do LibDems keep insisting that the rise in the tax threshold has taken many low paid “workers out of tax”? The increase, which by the way was less in percentage terms than the 2008/09 increase and a lot less in real terms, means that a full time worker on minimum wage is still paying tax on over £4000 of their earnings.
And as for linking pensions to earnings, all three parties pledged to do this. So it would have happened whether the LibDems were in government or not. Why is it that politicians feel that they can blatantly lie to the electorate, do they really believe that we are really all as dumb as they think?
Not to mention the fact that only a slim percentage of the income tax cut goes to the poorest. The vast majority of its cost goes to the rich and middle. Cutting a progressive tax has a regressive effect, funnily enough.
“So the Tories won the day
With enough support to say:
“We’ve a mandate for the things we plan to do.”
And they cut the income tax,
Then they raked the money back
By the simple trick of doubling VAT.”
The old anti-Thatcher chants may make a comeback with only slight tweaks. And yes it does rhyme in certain regional accents.
Anyway, at least your leaders are giving us plenty of ammunition for the future when you’ll want to dismiss the nasty aspects of this government as nothing more than a compromise.
@jayu: How do you figure less in real terms? 2008-9 change ended up being £810, 2010-11 will be up by £1000.
That should read 11-12, trying to post from my damn mobile.
@Thomas
If you look at the increase from the previous year you will get there. And if you take into account inflation you will get to the real terms figure. Simples.
@ jayu
the aim is £10,000 pa over the next few years. Not as fast as a Lib Dem majority government would have delivered but a much better than Labour’s removal of the 10% tax rate – and then partially giving it back with pa increase.
@JohnM
Aims are all very laudable, but the pride should come when the aims have been achieved. And if you want to take the low paid out of tax, then the tax threshold should be above the minimum wage. Now that would be laudable, but it isn’t LibDem policy, is it?
@Jayu: Sorry, I’m afraid I still don’t follow you. The difference between the two increases is £190. There hasn’t been total inflation of 23% of the 2008 price index by either CPI or RPI. The RPI has gone up by 10 basis points April 2008 to August 2010, putting total inflation at little under 5%, while the CPI has gone up 7 basis points giving us inflation of a little under 7% for the same period. Taking into account the CPI as its the larger measure, an equivalent rise in personal allowance today to the £810 rise in 2008 would be £864.95.
@Thomas
Sorry, not as simple as I thought,seemingly. In 2008/09 the increase was from £5225 to £6035, an increase of 15.5%. The announced increase is from £6475 to £7475, an increase of 15.44%. So if you factor in inflation, it is even less of of increase.
@Jayu: I follow you completely on the point of it being a smaller percentage increase. I never disputed that. Im calling into question your assertion that its a smaller real terms increase.
Jayu: You asked “Why do LibDems keep insisting that the rise in the tax threshold has taken many low paid “workers out of tax”?” Simple: because it’s true. HMRC’s figures are that 3.6 million income taxpayers earn between £6,475 (the old allowance) and £10,000 per year, so the increases between £6,475 and £10,000 will each take a chunk out of those out of income tax. Before you were talking about people on c.£80k as being middle or low earners; now you’re commenting as if those on between £6,475 and £10,000 are not low paid. I think your classification scheme needs a bit of a rethink 🙂
@Mark Pack
You will note that neither Vince cable or myself said “many” low paid workers. I don’t doubt that “many” have. My point is that if we can agree on nothing else, we have to all agree that everyone on minimum wage should be classed as low paid. So you will see why I am not convinced about the claim that you have taken the low paid out of tax, when someone earning minimum wage is still paying tax on almost 1/3 of their income.
And you keep bring up this £10000 figure as if it is a fete complete. It is an aim yet to be achieved. There could be many unforeseen circumstances to prevent the achievement of that aim.
And I never said that someone who is on 80k is a middle or low earner. Please do not try and twist my words.
Jayu: look back at your first comment on this thread: “Why do LibDems keep insisting that the rise in the tax threshold has taken many low paid “workers out of tax”?” You yourself used the word “many”, not “all”. Given that you now say, “I don’t doubt that “many” have.” you have answered your own question – the reason that the Lib Dems say that is because it is true.
@Mark Pack
Point taken. But my argument still stands, Vince Cable didn’t say many, and neither do other LibDems. You all trumpet this claim that ‘you’ have taken the low paid out of tax. Care to answer any of my other points?
@jayu: “And as for linking pensions to earnings, all three parties pledged to do this. So it would have happened whether the LibDems were in government or not.”
You’re not claiming that everything in Labour’s manifestos over the last thirteen years actually saw the light of day, are you? A pledge is one thing, to actually find the money to implement it is another thing altogether, especially with the financial situation we inherited.
@Mike(The Labour one)
“The vast majority of its cost goes to the rich and middle. Cutting a progressive tax has a regressive effect, funnily enough”
Only because there are more people on middle income than who are poor. For anyone earning, say, £10,000, they’ll get exactly the same benefit as someone earning £35,000, and that benefit will be a much bigger percentage of their income.
As for the rich, they don’t benefit at all. Have a read of the following:
http://www.pwc.co.uk/budget/2010/emergencybudget/emergency_budget_personal_taxes.html
“With effect from 6 April 2011, the personal allowance for individuals aged under 65 years of age will increase to £7,475 but the basic rate limit will be reduced so that higher rate taxpayers will not benefit.”
@George Kendall
But that still does not give cause to claim it. The Tories also pledged to do it. And if you are going to do hypothetical again, yes they may not have implemented it had it not been for the LibDems, But the problem with hypothesizing is that you will never really know what would have happened. So that is why I say that the claim is a false one. Claim it as coalition achievement, by all means, but not a LibDem one.