This year’s budget was, in general, a good one for Lib Dems. Most notably, the party’s number one priority of taking more low-paid workers out of tax was fast-tracked, while the controversies, and specifically the cut in the 50p top-rate at a time when pensioners’ tax allowances are being frozen, have hit their Tory backers’ support in the polls.
However, there is one lesser noticed and malign Budget change, the ‘Charity Tax’ — a cap on tax relief which threatens to cost the charitable sector hundreds of millions of pounds — which has not attracted mainstream media attention. That needs to change if the Coalition is to be talked down from a policy with Lib Dem fingerprints on it, and which will undermine philanthropic giving at a time when it is needed more than ever during the public funding squeeze.
No really. Despite the rush of politicians to recall when they last had a pasty or to be photographed eating one (me? south London, last weekend, Greggs, branch still open, no photo available), the problem is we’ve not had nearly enough media coverage of the pasty tax proposals.
“What?!?! Not enough coverage?!?!”, you might well wonder. But bear with me.
This year, there’s a lot of concern about public service cuts and rises in taxes for certain groups. This, to me, indicates the problem facing anyone in government – the British public wants better public services and lower taxes.
I fully believe that the electorate is not stupid. But, right now, it’s somebody else’s problem – how to square the circle between wanting good public services and as much cash as is needed to achieve this, and paying as little tax as possible. These aims are mutually exclusive in the main, and certainly as exercised by New Labour and Tory.
It is right for older people to contribute to deficit reduction…
Older people have been relatively protected from the spending cuts imposed by the coalition. The young have taken the brunt of the pain… Asking older people to contribute to tackling the deficit and shoring up the country’s tax base in the long-term is not unreasonable…
Osborne’s pleas of simplification have not played well, but he is right that age-related allowances add
Liam Byrne famously left a handover note to his successor as Chief Secretary to the Treasury, David Laws, saying “There’s no money left – good luck!” I was reminded of this as, after a very enjoyable 21 months as Chief Executive of CentreForum, I start on Monday as one of Ed Davey’s Special Advisers at DECC. I suppose the think tank equivalent would be “There are no ideas left – good luck!”
In fact that is far from being the case. One of the joys of running a think tank is that there is never a shortage of ideas to be …
In a significant victory for the Liberal Democrats, the Chancellor effectively introduced a 25 per cent minimum rate of tax in the Budget.
Under the changes, he will limit how much people offset their tax bills by investing in businesses or donating to charity.
Anyone seeking to claim more than £50,000 of tax relief in any one year will have a cap set at 25 per cent of their income from 2013.
Accountants said this means the wealthiest will have to pay at least 25 per cent of their income in tax. Although the highest rate of income tax is 50 per cent, reducing to 45 per cent next year, some wealthy people reduce their bills to almost nothing using different reliefs available from HM Revenue and Customs.
The introduction of this major change to the tax system is one of the main reasons why, as I wrote yesterday, if you are on more than £150,000, you will pay an extra £1,300 a year in tax on average as a result of this Budget.
The news that the UK’s February borrowing figures were the worst on record did not exactly provide the Budget mood music the Chancellor was hoping for. Then again, the stark reminder that the UK is living well beyond its means serves to buttress his arguments about the need to control spending. There is no money to spend, and even with the current deficit-cutting fervour from Number 11 the UK remains at the whim of global bond markets.
So how did George do? The stamp-duty increase on homes worth more than £2 million is eminently sensible, but must be accompanied by the …
As debate ahead of the Budget rages on about the merits of tax allowances and tax credits, a CentreForum report published this week provides new, detailed analysis of both.
The media has focused on the plight of the ‘squeezed middle’, Ed Miliband wants to help the “squeezed middle” and Nick Clegg is concerned for “alarm clock Britain”. But ‘Taxing decisions: the debate between tax credits and personal allowances’ uses modelling to illustrate the implications of tax allowances more rigorously and objectively than the day-to-day analysis of Fleet Street or Westminster.
The report’s authors, Thomas Brooks and Chris Nicholson of CentreForum, and …
Gateshead is hardly likely to go down in Liberal Democrat history as a mould-breaking or even memorable conference. On the key issue of the NHS, the spoils are divided. But our image among non-committed voters is bound to rise as a result of the look-again victory on Sunday morning.
Back in the real world, polls show us still struggling to reach double figures, the party’s tally of councillors is at its lowest level this century, and continual calls of betrayal from some former voters leave us in urgent need of good cheer.
The 50p top rate of income tax will be scrapped next year under plans to be unveiled in this week’s Budget…George Osborne, the Chancellor, will say that the tax is undermining the British economy by deterring investors and entrepreneurs.
It will be replaced with a 45p rate from April 2013, which Treasury officials believe will raise more money because fewer people will avoid it.
By the time of the election Mr Osborne hopes to scrap the higher rate entirely, with Britain’s highest earners paying 40p in the pound.
The decision is likely to prove highly controversial and will be attacked
Here’s your starter for ten in our weekend slot where we throw up an idea or thought for debate…
With leaks pouring out of the Treasury pointing towards the dropping of the 50p tax rate for high-earners above £150k in this week’s budget it seems a good time to have a robust debate about its merits.
The 50p rate was one of the party’s most high profile policies under Charles Kennedy, but was dropped in 2006 with greater emphasis instead placed on taxing wealth not income, as well as pollution taxes. However, in government, we have broadly supported the 50p rate’s retention …
Rumour a-plenty ahead of George Osborne’s third budget. Adding to theose rumours — or, more likely, giving us the inside gen on what’s likely to transpire — are the former Lib Dem chief secretary to the treasury David Laws and Lib Dem party president Tim Farron in The Guardian. Here’s an excerpt:
Nick Clegg has made the Liberal Democrat priority very clear – a significant acceleration of planned increases in the starting point for paying income tax. This should be Osborne’s centrepiece – easing the pressure on household budgets, after the unprecedented recent squeeze. …
To keep the cost down, the increase of £1,000 in the personal allowance this year excluded higher rate taxpayers and over 65’s. Also, the higher rate threshold was reduced to bring more people and income into the 40% tax band.
The 2011 budget announced an increase in the personal allowance for under 65’s by £630 in April 2012, with the higher rate threshold unchanged. The freezing of the higher rate threshold brings more people and a greater proportion of existing earnings into the higher rate band – so-called fiscal drag.
This process seems consistent with the aim of increasing the personal allowance …
Our economy will never recover if we continue to allow a privileged few to squirrel away increasing amounts of money into tax havens. But allowing people to take home more of what they earn both alleviates the squeeze on households and can boost spending where it is needed – on the high street, and in the community – creating demand and jobs.
We have already made great progress on making the tax system fairer. We have raised the rate of capital gains tax to 28 per cent, ending the scandal whereby people paid
‘Nick Clegg goes after the ultra-rich’ is how the Telegraph today trails its interview with the Lib Dem leader, in which he signals his determination to write into law a ‘Tycoon Tax’ — a specific minimum rate of tax to ensure people are “paying their fair share” and not “massaging” the system.
Given some of the recent speculation over the 50p tax rate, the speech from Stephen Williams (Co-Chair of the Parliamentary Party Committee on the Treasury) opening the debate on tax policy was significant:
Now is not the right time to drop the 50p tax rate.
The full context left open if there might ever be a right time, but unlike speculation in The Times a few days back, there was no offer of trading off the 50p rate against the introduction of a mansion tax.
His comments also reflected the text of the motion passed, which included:
Ahead of the most important austerity budget in a generation, the government plans to open up a huge new tax loophole that will cost ordinary people around the world billions warns ActionAid in a new report ‘Collateral Damage’
The international development charity has revealed that this loophole will allow UK based multinationals to avoid an estimated £4 billion worth of taxes in developing countries and will also cost the UK Treasury £1 billion.
Until now, the UK’s anti-tax haven rules have provided a deterrent to companies seeking to avoid paying taxes in Britain and poor countries alike. The proposed changes …
Reading my Spring Conference papers, I saw with interest the motion F7 “Making Tax Fairer”. Would we be doing something to simplify Britain’s massively over-complicated tax system, I thought? Might we be proposing something really radical like linking the personal allowance to the minimum wage or something to address the way people earning much less than the 50% top rate of £150,000 can pay much higher effective rates of tax, more than 50% – sometimes more than 60% – because of withdrawal of tax credits and then Labour’s inequitable withdrawal of the personal allowance?
No, I’m afraid we’re not doing any of those things..
Lynne Featherstone has criticised the idea of giving married couples a tax break, saying such a move would be “extremely unfair”. In an interview with The Times(£), the Equalities Minister said a reduction in tax for couples who tie the knot was a “bizarre concept… and wrongly aimed” and warned it was unfair on those couples and single parents who were unmarried.
By Stephen Tall
| Tue 28th February 2012 - 9:45 pm
It’s a month since Nick Clegg made a fresh bid to put the Lib Dems’ flagship 2010 manifesto policy once again front-and-centre: further tax-cuts for the lowest-paid to be funded by higher taxes for the wealthiest.
And today came news of what the public thinks of the Lib Dem approach to fairer taxes, with the Independent reporting the following ComRes poll results:
A majority of people want George Osborne to raise taxes for the rich in next month’s Budget in order to take more low paid workers out of tax, according to a ComRes survey for The Independent. Some
In a two-part investigation, Joe Bourke looks at youth unemployment. Sunday’s part two will have details of policies designed to provide guaranteed employment for 16-24 year-olds. In part one, we discuss changes to the tax system that would make such policies affordable.
If the 2012 budget sees the personal allowance increased to £10,000 we will have achieved a key plank of the 2010 manifesto and provided some welcome relief to the squeeze on incomes that has come not least from the increase in VAT to 20%.
Whether the increase in the personal allowance is achieved in this budget or subsequently, we will soon need to …
By Prateek Buch
| Fri 24th February 2012 - 12:09 pm
As part of the long-standing Liberal Democrat commitment to fair taxation, expressed so clearly by David Laws, the party has often called for a greater emphasis on wealth taxes.
As a direct result of these calls, it is now clear that the government is considering some form of wealth taxation to help deliver another long-standing Lib Dem tax policy – giving millions of low- and middle-earners a welcome boost by raising the income tax threshold to £10,000.
The precise nature of increased taxation on wealth is a topic of much discussion. Radio 4’s Today programme carried an interesting discussion of …
By Caron Lindsay
| Wed 22nd February 2012 - 12:53 pm
David Laws has argued at the Guardian’s Comment is Free site that the Coalition should accelerate Liberal Democrat tax cutting plans.
The government’s previous plan was for the allowance to rise in steps of £630 over the next few years, to reach £10,000 by April 2015. Clegg and chief treasury secretary Danny Alexander are rightly insisting that we look to bring forward those tax cuts. This week they seemed to attract the unlikely support of Labour’s Ed Balls. But his plan for a totally unfunded tax cut is as unlikely to convince the deputy prime minister as it is the chancellor.
Liberal Democrat pressure in the coalition government has already secured significant reductions in the tax breaks for the very richest. However, these tax breaks are still sufficiently generous that there is the scope for raising plenty more money without introducing punitive tax rates.
For example, restricting the tax relief on pension contributions to 20% (the standard rate for most people) rather than the current 40% for those earning over £100,000 would raise over £3.5 billion more each year. Last year, in a clear sign of the way in which senior Liberal Democrats are thinking, David Laws asked a series of Parliamentary …
By Stephen Tall
| Fri 10th February 2012 - 7:55 am
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 570 party members responded, and we’re publishing the full results.
Overwhelming support for ‘further and faster’ tax-cuts for low-paid
LDV asked: The Coalition is committed to increasing the level at which income tax becomes payable, from its current £7,475 to £10,000 by 2015. The tax-free threshold was expected to rise by about £630 annually. However, in a recent speech Nick Clegg said, “I want the Coalition to go further and faster in delivering the …
Readers may be interested in an e-petition on the HM Government website which calls on the Government to implement the tax cuts for the people on low and middle incomes which Nick Clegg called for last week. It says:
Please sign this to persuade George Osborne to fast track the Lib Dem policy to increase the income tax threshold to £10,000 in the next budget, and hence take thousands more people out of tax and put £700 back in people’s pockets. There are measures that can be taken to pay for this including the clamp down on tax avoidance and
Over on his work blog, The Voice’s Mark Pack has a post looking at the extremely successful media coverage of Nick Clegg’s speech on tax policy, with the party using the fact that much of the media is still surprised by the idiosyncracies of coalition to our advantage.
Here’s a sample:
In a country used to coalitions, having the leader of one of the parties in government talk about their tax priorities a few months ahead of a budget would not be remarkable. With the British media habits, it had made today’s speech from Nick Clegg to banner news – lead story
Shock! Horror! Lib Dem business secretary Vince Cable advocates Lib Dem manifesto policy!
The Telegraph today reports that Vince’s policy — which would levy a 1% annual charge on all properties valued above £2 million — is still on the table as the Coalition writes its second budget:
Vince Cable, the Liberal Democrat Business Secretary, is pushing for a mansion tax to be introduced on properties worth more than £2million in this year’s Budget. While the policy is likely to be opposed by George Osborne, the Chancellor, Mr Cable said that he had spoken to Conservative MPs who backed the plan.
“A mansion tax is still very much on the agenda – it is a very good idea,” Mr Cable told The Sunday Telegraph. “It is good for two reasons,’’ he said. ”It would constitute a tax on wealth rather than income, which we believe to be right, and also in economic terms it creates the right sort of incentives for the property market.”
Mr Cable added that it was “perverse” that rich “foreigners” could buy expensive properties in Britain and contribute just £1,000 a year in council tax towards the public finances.
3 ways of reading Vince’s comments
There are a couple of ways of interpreting this fresh pitch.
Jeff How relevant is this to Trump’s MAGA movement, to Farage and Reform?
Of little to none I would have thought. The political ideologies that came to d...
Nonconformistradical I second Henry's comments about Barrow - this south-eastener has at least, albeit not recently, set foot in the Barrow constituency (visiting friends who lived ...
John Peters I would not have classed Barrow-in-Furness as post industrial. For decades it has had the same major employer - the dockyards. It manafactures the UK's nuclear ...
David Raw @ Daniel Walker, "we should have the cheapest possible democracy".
I didn't say that, Daniel, though what I imply is that the party needs to prove to and mak...
Henry I do get very annoyed by the comments on these by-election posts. The over-exaggeration of our comeback because we won last week and then complain when we finis...
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Jeff 
Nonconformistradical 
John Peters 
David Raw 
Henry 