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FactCheck: is Nick Clegg right about David Cameron's one-tax Tories?

By Channel 4 News

Updated on 14 September 2008

The Lib Dem leader taunts his Conservative rivals. But has he got his facts right? FactCheck investigates.

The claim

"[The Conservatives'] only tax proposals - inheritance tax proposals - which are the only tax proposals they've put forward since George Osborne and David Cameron took over - will only benefit the very wealthy."
Nick Clegg, Lib Dem leader, Andrew Marr Show, BBC 1, 14 September 2008

The background

Fairness is fast becoming a hot political grail, with all three main parties scrabbling to stake out territory as the fairest of them all.

The idea of a fair and equal society is traditional Labour turf, and the party has placed great store on the likes of tackling poverty since coming to power.

Last month, the Conservatives tried to scupper a leaked Brown relaunch around the theme of fairness, instead attacking the "unfair Britain" it claims Labour has created.

As the Liberal Democrats' autumn conference gets into gear, the leader Nick Clegg was questioned on whether his party - which has long claimed to have "fairer" tax policies - wasn't just turning into another version of the Conservatives.

Not so, said Clegg. He attacked the Tories for "talking the talk" on fairness, with little to back it up.

He accused the Conservative leader and shadow chancellor of planning inheritance tax changes which he would only benefit the rich.

But is this really the only policy the Tory twosome has unveiled in the past-nearly three years?

The analysis

Shadow chancellor George Osborne whipped an inheritance tax-cutting rabbit out of the hat at the Tory conference last autumn.

Back in that election-that-never-was period, he announced plans to lift the death duty threshold from £300,000 to £1m.

The Tories claimed this would the benefit the owners of the 40 per cent of the homes that were liable for the tax.

In reality, however, it's a less wide-reaching measure: in 2006, only 6 per cent of estates paid inheritance tax, suggesting that although many people own valuable homes, the wealth may have been spent or given away before they die.

The Tories have announced a short shopping list of specific fiscal policies, of which a change to inheritance tax is one - but not the only one.

The government made some changes to inheritance tax last October, but fell short of increasing the threshold as much as the Tories propose.

But what about the Tories' other tax proposals? According to Nick Clegg, there are none.

Not so, as a simple look at the announcement of Osborne's inheritance tax plan demonstrates.

His speech last autumn also proposed increasing the stamp duty threshold - the value at which a property purchase becomes taxable - from £125,000 to £250,000.

This was sold as taking first-time buyers out of stamp duty, and it's far more generous than the temporary increase of the threshold to £175,000 recently announced by the government.

The Tories reckoned their measure would benefit 200,000 people a year. Those who gained would have to have enough cash to buy a property, of course. But out of property buyers, it would be helping those at the lowest end of the ladder.

The party has also promised to increase the working tax credit that couples receive, to bring it in line with the amount the same people could get if they were claiming as two single people.

This would, they reckon, give an extra £32 a week to 1.8 million of the poorest couples with children, although as it would be funded by reducing the number of people on benefits, the party has yet to give a firm time commitment on when the working tax credit change would be implemented.

David Cameron is also committed to recognising marriage through the tax system -though he has yet to specify exactly what that would entail.

This summer, the Tories also announced plans for a fair fuel stabiliser, which would cut fuel duty when the oil price rose, and increase the tax when the oil price fell.

This would go some way towards cushioning drivers from the kind of fuel increases we've seen recently - although they would have to pay slightly more should the oil price decrease.

The verdict

Clegg initially makes a valid point - the Tories talk about fairness, but with many of their policies still on the secret campaign drawing board, it's tricky to pin down exactly what would change under a Cameron government.

But the Lib Dem overshoots the mark. The Conservatives have announced a short shopping list of specific fiscal policies, of which a change to inheritance tax is one - but not the only one.

The changes to inheritance tax would benefit a wealthy segment of society - although it's worth remembering that the Conservatives planned to fund them by imposing a levy on non-doms, rich foreign residents who currently pay no British income tax.

And as a side note, the Lib Dems have also set out plans to increase the inheritance tax threshold - although to the more modest sum of £500,000.

It's not that the Conservatives have said they'll go out of their way to help the poorest pay less tax, but it's not true to say all their policies would benefit the wealthy - the increase to the working tax credit means the claim just isn't justified.

FactCheck rating: 4

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