David's Blog - 2010

Here are my thoughts for some of the day

Monday, 4th January 2010

Tory sums do not stack up

With the current mess in the public finances what is needed is a clear approach that is fully budgeted. Having fully budgeted out policies is something that the Liberal Democrats have always done and will continue to do. It is simply not viable for a major political party, such as the Conservative, to claim they are an alternative governing party without having clear policies on the Governments finances, particularly at a time of severe Government debt.

The mess of the Conservative Party is particular highlighted by their plans or rather lack of them over recognising marriage in the tax system. They say it is something they wish to do but don't say how or when, so it is a pretty unclear plan to say the least. The only tax proposal they are clear on is removing inheritance tax from all estates up one million pounds for single people and two million pounds for couples.

In stark contrast as a Liberal Democrat party we have said that we would:-

• Increase income tax threshold to £10,000 - increasing the starting point for income tax would remove nearly 4 million of very low earners from paying tax and reduce the tax burden on many other low and middle income earners. In fact it would cut the average working age person's income tax bill by £700 and cut average pensioner's income tax bills by £100. This change would be paid for by closing tax loopholes on high earners and switching taxation from income to pollution.

• Increase inheritance tax threshold - to 500,000 single people and one million pounds for couples to fairly a just the tax system to reflect changes in house prices. This would be paid for by decreasing the scope for the very rich who can afford to pay accountants to avoid the tax through the gift of the loopholes.

• Abolish Council Tax - Fairer taxes raised and spent locally. This would reform local government finance so it is fairer and communities raise more of what they spend. This can only be achieved if council tax is scraped, as it penalises pensioners and people on low incomes, who pay a far higher proportion of their income in council tax than the very rich. It would be replaced with a local income tax which is based on the ability to pay. It would be run through the existing Revenue and Customs Income Tax mechanism - so saving hundreds of millions of pounds by abolishing council tax administration. Under these plans everyone would pay a percentage on all their taxable income to cover the costs providing local services. To give real power back to local government the purse strings ties from central government would be cut, as over time the central government grant to local would reduce along with central government income tax, with this central government cut would be a matching local government income tax increase. The difference in income tax levels to the individual would be zero but the change to local government ability to manage their affairs as local people wish would be immense.

• Correct unfair tax credit system - all apart from the current government agree that a couple's penalty that exists in the tax credit system is unfair and this is why our priority is fair tax and benefits system. So when Government finances allow we would introduce a couple's premium to correct this particular unfairness.

Commenting the Conservative party plans and on David Cameron's decision to stick with his proposed inheritance tax cut and his assertion that it will be paid for by taxing non-doms, the Liberal Democrat Shadow Chancellor Vince Cable said:

"It's unbelievable that the Tories are still planning to cut taxes for a handful of millionaires when the majority of people across the country are feeling the squeeze. We need fair tax cuts that put money back in the pockets of ordinary people. The Tory sums simply do not stack up. It is irresponsible and highly misleading for George Osborne to continue to pretend that they do. If Osborne and Cameron can't get these simple sums right how can they possibly be trusted to run the economy."

Tory married tax break: Hope or promise?

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