Lib Dems unveil 'biggest tax switch in generations'
Updated on 12 April 2010
The Liberal Democrats vowed this morning to put an end to Labour's "outrageously unfair" tax system, promising the "biggest tax switch in generations" that would shave £700 from the average worker's income tax bill.
Party leader Nick Clegg said he would cut income tax bills for middle and low-earners, rebalancing the tax system making it "fair once and for all".
Workers would not be taxed on the first £10,000 of annual earnings under the Lib Dems tax plan.
The policy would see 3.6 million people on low incomes exempted from paying income tax.
Clegg said the savings would be covered by waging war on tax dodgers, closing tax loopholes abused by the rich, equalising capital gains tax (CGT) and inheritance tax (IHT) and introducing a "mansion tax" on 80,000 homes worth more than £2m.
The crackdown would swell the government's coffers by £17bn, he said, adding that "unlike the Conservative Party, we are setting out in full, in detail, where every last pound of the money will come from".
The bottom 20 per cent of income earners now pay a "much higher proportion of their income tax", Clegg claimed, widening the gap over the last 13 years under Labour.
Clegg said: "Under Labour the tax system is complex, unwieldy and most of all unfair. This has to change.
"Liberal Democrats will rebalance our tax system to make it fair once and for all".
Speaking alongside his high-profile Treasury spokesman Vince Cable, Clegg brushed off rumours of a rift between the two men.
Clegg said he was "nothing other than proud" of Cable, "Vince and I have always worked, and continue to work, as an extremely good and effective team together".
"We are proposing the biggest tax switch in generations. A radical overhaul to make sure those at the top pay their fair share in order to put money back in the pockets of people who need it".
Cable outlined how the Lib Dems tax policies would be costed. He said "The estimates we've made here are quite sufficient to fund our key offer, which is that nobody pays income tax up to £10,000 a year.
"That's just over three-and-a-half million people: low-paid workers and pensioners taken out of tax, and a tax cut of £700 for the average tax-payer."
Clegg said that under the Lib Dems there was no need to implement a hike in value added tax (VAT). "We have a fully costed approach", he said.
He also pointed out that the Lib Dems are planning only one new tax in order to generate revenue – a ten per cent levy on the profits of banks.
