Political

Nick Clegg returns to income tax

Later this morning, Nick Clegg will be giving a speech to the Resolution Foundation in which, after recent talk about wealth taxes, he is returning to the topic of income tax cuts. More specifically, speeding up the progress towards a basic income tax allowance of £10,000 whilst keeping the 50p rate.

This is of course closely linked to wealth taxes as they are a way to raise the funds to pay for the income tax cuts.

Aside from the numbers adding up – a very important consideration for tax policy – it also has the merit of fitting well with what the public wants from political parties (a commitment to fairness). Moreover, it is rather a political win-win: the idea of income tax cuts attracts Conservatives enough that it may happen, but the Tory-repelling wealth tax part means it is clearly seen as a Liberal Democrat package.

The importance being attached to this message by the party is shown by the speech not only being heavily pre-briefed to the media (resulting in, for example, the lead headline on the Daily Telegraph’s front page: Nick Clegg: speed up the tax cuts) but also a pre-speech email to party members from Vince Cable:

As families face more of a squeeze, today Liberal Democrats are arguing for greater tax cuts for hard working people.

Between now and the Budget, Nick and Danny and I will be arguing for faster tax cuts, giving you a reward for hard work. And Nick will be setting out our case in a speech today.

Given the budget constraint we have to raise money for the tax cut elsewhere and have plans to raise an equivalent amount from the wealthiest taxpayers.

At the last election the Liberal Democrats promised to raise the personal allowance for ordinary taxpayers to £10,000. I am proud that the Coalition has committed to doing so over the course of this Parliament.

For millions of ordinary hard working people, that means paying £700 less in income tax each year. Low earners, mostly women will benefit from being lifted out of tax altogether.

But times are tough and quite simply, Liberal Democrats in Government want to help families who are currently being squeezed by moving more quickly.

Whether it’s targeting an extra £7bn from tax evaders and avoiders, taking an extra £2.5bn every year from the banks in a balance sheet tax, or the announcement I made on Monday to curb the excesses of executive pay, this Coalition is taking important steps to deliver a fairer economy.

And we have already made a big difference.

We are building a new economy, one that benefits the whole country, not just bankers in the City of London. Making the tax system fairer is crucial to that. This is a huge task that will make Britain a fairer and more liberal country for generations to come.

 A footnote for political vocabulary fans: “alarm clock Britain” is set to make a return in today’s speech.

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