A fairer tax system, putting money back in the pockets of ordinary people, was demanded by Liberal Democrat leader Nick Clegg today in a major speech which has already received positive reaction from across the political spectrum.
The centre-piece of the speech was a call for the Coalition to move further and faster on introducing a £10,000 income tax allowance, taking millions more out of income tax completely and saving working people £700 per year on average.
This would be paid for by increasing the amount of tax paid by the very richest and blocking Conservative moves to cut the top tax rate.
Helping those most in need
Imagine a mum who works three days a week as a teaching assistant – earning £10,000 a year or just over £190 a week. Under Labour she paid more than £1,000 in income tax and national insurance. Although she wanted to work more days a week she knew it was not financially worth it. Under Labour; once tax, tax credits and housing benefit has been deducted, for every extra pound she earned she was able to keep just 10.5p.
Under Nick Clegg’s plan she would see her income tax bill cut to zero making her £700 a year better off.
We’re ending the scandal, under Labour, of a hedge-fund manager paying less tax on their shares than their cleaner paid on their wage – Nick Clegg
Fairer taxes
The Liberal Democrats have already won major changes to our tax system, making it fairer:
- We’ve clamped down on tax avoiders – targeting an extra £7bn every year;
- We’re taxing the banks by an extra £2.5bn every year;
- We’ve stopped Conservative plans for a double round of tax cuts for the richest (both inheritance tax and income tax);
- We’ve made taxes on wealth fairer by raising them to be closer to those on income;
- We’ve reduced tax breaks on pension funds for the super-rich; and
- And our overall priority is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers.
Positive reactions
The Deputy Prime Minister is right. There is a moral case for the move: it would make work pay by taking low earners out of the tax system … This policy is a genuinely progressive one. Evening Standard
Today Nick Clegg has almost certainly found a … popular cause … This is the cleverest political position he has yet adopted. Tim Montgomerie, ConservativeHome
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