Nick Clegg Says Fair Tax

Did you know that the poorest 20% of the population are paying a higher proportion of their income in tax now than in 1997?

Did you know that the richest 20% of the population are paying a lower proportion of their income in tax now than in 1997?

So when Gordon Brown attacks the Tories for giving tax breaks to the rich he should look at his own record.

That is why today Nick Clegg is talking about a fairer tax for Britain. Lifting the personal allowance threshold to £10,000 putting £700 into the pockets of low to middle earners. Lifting 3.5m out of tax altogether. In a tax switch that will be paid for by closing loopholes that exist, cutting down on tax avoidance a mansion tax on the value of homes over a £2m threshold and aviation taxes.

Hey if everyone else is going back to the 80s with election material, I think we need these T-shirts.

Dooh Nibor Tax Breaks

I have long been arguing for Labour to stop using the regressive taxes such as national insurance and VAT to get their pound of flesh especially from the poor and deal with progressive taxes. Well today Alistair Darling did that but what has he done. It is another example of Dooh Nibor* taxation like the doubling of the 10% tax rate. It may not be as bad but it is another move in that direction. The personal allowance has not gone up from £6,475, this at a time when the Chancellor capped all public sector pay to a 1% increase, inflation is running at about 3%.

Pensions have been removed from index linking and now so has the personal tax allowance. The worse off are going to suffer more yet again. Yes they may well get a pay rise bit more of it is taxable and therefore their tax burden increases once again. Add on to this the fuel increase 3% in stages. I can see the bus fares increasing in stages at each increase and yet again by a higher percentage than the actual add on to the costs.

Under the Lib Dems the income tax personal allowance would rise to £10,000 pounds. The poor would be better off not worse as Labour have left them in this final budget before the general election. Yes it is costed Jeff counter balanced with making the tax system fairer, closing far more loopholes that Darling did earlier but as you say Labour have launched an attack on the poor.

As for the increase tax on cider, as David Heath has just said in the commons, it takes year to grow a harvest capable of producing cider. The sudden increase may well affect the artisan ciders rather than the high alcohol mass produced drinks that are a source of binge drinking. Heath suggested a production volume exception or a alcohol level to incur the 10% increase as alternatives rather than the flat rate suggested. But hey, flat rates are the Labour way.

* Robin Hood in reverse taking from the poor etc.

The Cost of Cameron's Marriage Dowry

David Cameron has been promising to give tax breaks to married couples, you may have picked up on this. What you won't have missed is how he is intending to pay for this, because he hasn't told us.

Today the Guardian has looked at the options and just how unfair or untruthful David Cameron is likely to have been with his pledge.

Firstly the most obvious thing is to allow transferable tax allowances between couples. According to treasury figures this would cost a total of £4.9 billion, which in or current climate, especially with the Tories promising to accelerate spending cuts seems a high price to pay. Also such a scheme would only benefit couples where one partner is earning less that £6,435 a year. It really does favour the couples where a wife can stay at home, but does nothing to help two hardworking parents who both work full time to support their family.

However, the Tory think tank the Centre of Social Justice run by former leader Iain Duncan Smith is urging Cameron to only limit such a transferable allowance to couples with children under the age of three. Is is any wonder that Cameron isn't prepared to come clean about his policy? His bribe is to all married couples but his advice is actually to limit it still further to just that three year period.

The CSJ had first proposed the transferable allowance in 2006 but today in their Green Paper on the Family they say:

"In the long term we recommend the implementation of a transferable tax allowance for all married couples, but in the current financial climate we recommend a staggered implementation. We believe that as a priority, a transferable tax allowance should be introduced for married couples with children aged 0-3, the formative years of a child's life."

This will cost £600 million but is nowhere near the promises that Cameron has made in recent weeks. Of course he also had added on civil partnerships to his scheme, even if a same sex couple had children they may be from a pre-existing relationship and not count towards the under three threshold, or be adopted and not give the break for the full or any of the 3 year period. It also means of course that a mother in an abusive relationship with an infant could flee and struggle with the tax hike as not all marriages live up to the Tory idyll.

Yesterday defending his claims that he wasn't guilty of 'social engineering' David Cameron said:

"I will celebrate our commitments. I believe we need to try and build a society that is more about "we" that about "me" where we celebrate togetherness."

Seeing as his tax proposals so far benefit married couples, or with inheritance tax the super-rich 3,000 including George Osborne and David Cameron, doesn't seem to not be much about "we" and somewhat about "me". The Tories are also going to freeze all public sector pay over £18,000, or in other words even if you earn over £8,000 less than the national average, while giving away these tax breaks to others.

David Cameron also said:

"The tax burden for everybody is going to go up unless we get public spending under control. We should be trying to help couples with children."

The Lib Dems have realised that the tax burden is unfair, but rather than focus on couples with children who need help we are focusing on the poorest in our society. Raising the tax allowance to £10,000 will raise 4 million out of income tax altogether, including most of our pensioners. It also means those that have to scrimp at save at the bottom end of the ladder will get help. The Tories are not making promises to the poorest apart from the fact that your tax will go up, but if you're married with kids we'll try and help you out.

UPDATE: I'm quite glad that Cardiff Blogger has also called it a half-baked idea emphasising the element of the CSJ document that seems to suggest the allowance will make people get married quicker.

Quote of the Day - Lord Tebbit

"Only one party leader seems to have grasped that, if you construct a system where unskilled people are worse off by taking a job than by staying on welfare, they remain trapped in poverty – and that is Nick Clegg....

"The two main parties are unwilling to bite on the bullet and commit themselves to raising the income tax threshold from £6,475 to something like £10,000 or £12,000.

"It is madness to claim that people so poor that they need welfare payments are at the same time sufficiently well-off to pay income tax."

So says Lord Tebbit on his Telegraph Blog this morning.

You know what he is darn right. The national minimum wage for a 37 hour week comes to £11159.20. How can that be the minimum when 42% of it is taxable.

U is for Unfair

A continuing series of spelling out Conservative plans part 9.

Today Danny Alexander MP for Inverness, Nairn, Badenoch and Strathspey and Nick Clegg's chief of staff highlights how unfair David Cameron's marriage tax breaks will be by highlighting a few examples that we are all aware of that shows it inherent unfairness. I've emboldened some of the key phrases within his statement.

"David Cameron didn't just mess up because he blundered in an interview, he messed up because his policy is incoherent and fundamentally unfair.

"It is unfair because it gives tax breaks to married couples where one person can afford to stay at home, but does nothing for couples who both work.

"It is unfair because a family that loses one parent will have their tragedy compounded by an effective tax rise.

"And it is unfair because ultimately it takes money from the pockets of poorer families and gives it to rich ones.

"When the country is mired in recession and public finances are in a dire state, this is a mess that we cannot afford.

"Labour has failed to deliver fairness and the Tories can't be trusted to make the country fairer. Only the Liberal Democrats will build a fairer Britain."

Compare that with the far promises on tax that Nick Clegg has recently be laying out that are Lib Dem policy.

"Our plan would mean that the first £10,000 you earn would be free of income tax. This would be paid for by taxing income and capital at the same rate, phasing out special pension subsidies for highest-rate earners, switching tax from income to pollution and introducing a mansion tax on the value of homes above £2 million."

Everyone would benefit from the lift from just over £6,500 to £10,000 of the tax threshold.

With capital being taxed at the same rate as income tax the rich will not be able to avoid paying what is their due by shifting income into capital to gain the lower rate up to the margin.

Aiming for a greener way of taxing so that as we pollute we pay. We know there are some in our remotest areas who have no option but to drive and we are also looking at ways to be fair to them too.

While Cameron in looking to give the super rich a nice handout through his proposed reforms of the inheritance tax at the top end, we realise that the super rich, who can afford to buy and to run £2m houses, can afford to pay an progressive tax as a result to again help out the poorest who pay proportionately more income in tax, and that would increase under the Tories.

Compare the tax policies for fairness. Shouldn't a progressive Britain (one of Dave's favourite phrases just now) have progressive and fair taxation? If so, then the Lib Dems are the way to go.

In which I Issue a Retraction

Readers may remember how last year I supported Michael Connarty when he fought for our poorer people who were left worse off by Alistair Darling's scraping of the 10p Income Tax rate.



However, following his vote on Tuesday against the retention of the 10p rate I withdraw my support on that issue. There were still some Labour rebels prepared to fight for what is right and fair for our most hard pressed citizens in these tough times. The Labour Government may well be talking about the 10% cuts of the Tories but have failed to waken up to the fact that they are in fact doing just that to the lowest paid. Frank Field who again led the rebellion to support the amendment to the Finance Bill said:

"The golden thread that knits us all together is that we came into this place not only to protect but to advance the interests of those who get the least from life.

"The 10p is a denial of all that we have come into public life about, and this is our last chance before the general election to rectify it."

Michael seems to have forgotten that thread even though he promised to stand up for such people when he sought election in 2005.

Fairer Tax is Possible and Right for Now

One hundred years ago in 1909 David Lloyd George rose to the Liberal Government's dispatch box to present what was to go down in history as the people's budget. From the speculation of what Darling is going to announce of Wednesday the people aren't going to do too well out of the budget marking that centenary.

However, step forward Vince Cable alongside another Liberal leader Nick Clegg with the ideas that really do put the people first. This morning they announced plans that would effectively cut income tax bills for those on low and middle incomes by £700. This will be done by raising the personal tax allowance to £10,000 pounds.

How can this be afforded? Well it will merely be a tax switch, no additional revenue will be required to fund this initiative. The Labour Government already estimates that £10-40bn is lost though tax loops of the most wealthy, those who have led this country into the level of debt we are currently in. By targeting approximately £3-4bn of that lost taxes this aim of helping those on the lowest income can be achieved. By doing so it will lift 4 million out of income tax altogether.

Measures which the Liberal Democrats are proposing to use include:

• Restricting tax relief on pension contributions to the basic rate (why should the top earners benefit proportionately more than those cleaning their offices, indeed normally their relief is just another perk)
• Taxing Capital Gains at marginal income tax rates (basically closing once again one of the loopholes closed by Nigel Lawson that the rich had used to avoid paying the highest rates of income tax. A loophole reopened by Chancellor Gordon Brown)
• Tackling Stamp Duty Land Tax Avoidance and Corporation Tax Avoidance (two of the ways that business have been robbing the hard working for years)
• Subjecting benefits in kind to National Insurance Contributions as well as income tax and applying National Insurance to multiple jobs (why should the perks of the well paid not be taxed when the poorer have to scrimp and safe for some of the same things)
• Switching aviation taxes from per person to per plane and increasing taxation on non-lifeline domestic flights (so those with no option but to fly don't need to worry but the cleaner services like the train, video conferencing, home working etc may become more attractive to those execs who fly weekly of course enough still will for this to still raise revenue)

But why bother, aren't we in a time of low inflation? Well yes the headline rate of inflation is at it's lowest for ages but this is not what those on the lowest incomes experience. Indeed the things that fill their spending at the things that are still going up faster that that headline rate.

Can we still be talking about cutting taxes when the Government are talking about cutting public expenditure? Yes we can. We're not actually talking about cutting the tax raised merely switching the attention from those who are disproportionately over taxed by making those who can afford to pay accountants (like my brother) to avoid paying their fair share at least in some easily to remedy areas. Also cutting public expenditure at this time is going the wrong way we need to start growing again first, although Darling may try and talk you into believing that it all that can be done on Wednesday, but we all see that the Labour Government has run out of ideas.

How much will people lose out and how much will people gain? Well the £700 is the headline figure. £10k will go some considerable way to lifting most of the income of those full time workers on minimum wage out of taxation which is far more than this Government tried to do last year by taxing them more by removing the 10p rate of tax. However, there is a fairness in helping those who can't afford to help themselves whereas looking at the businesses and high earners to burden a fairer share of their responsibility.

Clegg Wants to Break Through the Cosy Cabal

"This is the route out of recession. But the other parties will not
deliver it. Liberal Democrats – and Liberal Democrats alone – can
truly change Britain for the better.

"Together, I know we can make it happen."

Is how Nick Clegg finished his speech opening the One Day Policy Conference at the LSE about Progressive Society. He accused Labour and the Conservatives of forming a cosy political cabal sucking the life out of politics.

"Both parties' dependence on special interests, their centralising,
micro-managing ways, that ignore the needs of ordinary people and local
communities, that’s what’s sucked the life out of our politics.

"The two old parties have been running Britain, turn and turn about, making
the same mistakes, for longer than most people can remember. A cosy cabal,
not wanting to change too much. Happy enough with the status quo because
they know they’ll get their foot in the door of a ministerial limousine sooner
or later.

"Labour and the Conservatives – the old parties – are
incapable of real change."

He went out to outline areas of real and radical change in taxation, investment in a stable, green economy fit for or children. About not "clobbering" future generations with debt due to our inability to do anything or the right thing to shorten and limit he effects of the recession. About carrying out a spending review to make sure that what is spent is spent well. Looking at investing wisely in areas such as childcare and education.

Both Labour in Westminster and the SNP in Holyrood have argued that our tax cuts and spending plans do not add up, but have they really looked at what we are saying. We are saying that a review will show up the waste and enable us to spend better. Look at some of the things that Government does spend money on, not necessarily bad things, but not necessarily the best use of money. Nick says:

"It's the duty of a responsible party and a responsible government to squeeze
everything it can out of every penny of tax. This is not "government money"
– it’s people's money, money they worked long and hard to earn. We should
take it away in taxes only when we’re certain we’ll spend it well."

Yes we are facing tough times financially but just as the people are finding ways to get the most out of what disposable income they have remaining, so the government should and ought do likewise. Yes we need to invest, but invest it wisely and make changes that will make it easier for people to able to cope, after all politicians are the people's representatives. The Nats in Scotland have announced less than 1% change on what their spending review said in 2007. The Tories likewise are staring in the headlights like a rabbit with their do nothingness. Or Labour with their "pinprick" VAT reduction which has had no effect.

Labour and the Tories, Nick argues will never make a big change like this. They’re far too timid, too stuck in the old ways.

I see that Tom Harris isn't too impressed quelle surprise no change there then.

The Lib Dems Aren't for Playing With Scotland's Future

I see that Jeff has taken time out from his extended break in the Far East and down under to ask ""what are the Lib Dems Playing at?". Well strangely I think exactly the same with regards to John Swinney.


In October 2007 the spending review issued plans for this budget period. This was long before most parties the SNP or Labour woke up to just what was going on in the world around them. It was indeed a long time before John Swinney or Alex Salmond told us that an "economic storm" had engulfed Scotland. The change is this budget over those spending plans is only 1%. That is the weakest, most miniscule reaction and attempt to boast their economy of ANY Western democracy to the current crisis. It is indeed the budget of do nothingness when everyone is crying out for action.

Jeff earlier today also passed comment on here that the Lib Dems should not vote against the budget stage 1, as they did, but sit down and get some of our 2007 manifesto pledges discussed. In case Jeff hasn't noticed while swanning around the Far East and Australia, on his banking bonuses I guess, people have moved on from the 2007 manifesto. They are concerned about the budget, that of their own pockets. People are now more likely to shop around for a bargain. Indeed you now see far more people scouring the reductions at supermarkets before they get marked down than a year ago when hey merely waited.

The Lib Dem proposals offer £330 pounds back into the pockets of the low and medium earners of Scotland. £330 pounds that in the words of one person I saw on TV last week would make the difference between having to decide whether to heat or to eat but allow the luxury, shame though it is to say that, to do both.

While his and his fellow Nats criticise the Lib Dems for not knowing fully where the savings can come from what is clear is that at least we are looking they clearly haven't had a major rethink. Oh and as for there needing to be more spending as well. That is because while giving money to the poorest will instil some economic stimulus it is also the time for Government to step up to the plate.

So what are the Lib Dems doing to answer the question? We're not looking for a quick fix we know that isn't possible. We're also not prepared to sit back and take a lily livered approach to Scotland Future as we trust that by doing next to nothing Scotland will end up going deeper and staying longer in this downturn. This is most definitely not a time for business as usual budgets which is what the SNP have offered up, in that actually both Labour and the Conservatives so somewhat agree even if they allowed the passage of stage one. Neither of those other parties support can be said to be in the back.

Vince Cable, who is widely regarded as one of the few who saw this coming, has back Nick Clegg's proposal for real and permanent tax cuts for the lower earners as part, not all, of the required stimulus at this time. While the Lib Dem position has been ignored at Westminster with their sizable Labour majority, We here in Scotland through Tavish Scott and Mike Rumbles who was sent to show intent have a Parliament that is meant to rely on consensus so we laid down a challenge to not be as timid as Gordon and Alistair the Scots running thing for the UK. However, Alex and John are actually proposing less than even the little that those other Scots are doing.

Greening the Budget But What?

You have to applaud Patrick Harvie and Robin Harper for getting their £1bn deal (over 10 years) free insulation deal for Scottish Homes into the SNP budget. It is a very good move and something that a Labour led coalition would never have acceded to, so they have grasped their opportunity well is getting this through.

The Nats of course are worried that without a precedent to abstain if you don't like the budget, as we've had in Westminster since the days of Lloyd George, they could have faced defeat if they could only have garnered the support of the Conservatives as they did last year. Alex Salmond indeed was clearly panicked earlier in the week when he again threatened to go home and call an early election if the other parties refused to play with his fitba.

One thing this new budget doesn't seem to do is address the issue of how the credit crunch is affecting the people of Scotland. Alex Salmond was all bluster when Gordon Brown was thinking about what to do for the people of the UK. Neither are addressing the most hardly hit, Darling tinkering with VAT is not making a major impact on the poorest families of Scotland and Salmond in his budget appears to be all hot air.

Tavish Scott took over as leader of the Liberal Democrats by calling on the Scottish Government to make real cuts to help the people of Scotland. With the Scottish Futures Trust floundering like a beached whale in the Firth of Forth one wonders if the former economist really has a grasp of business and individuals economic needs and responsibilities at this time. The Lib Dems earlier this week reiterated their call for cuts in the personal rate of income tax. This is something that Alex actually can have some control over. Like the lift at the offices of the Hitchhikers Guide to the Galaxy might have said when asked by Zaphod to rise, "Have you considered all the possibilities of down?" This budget from the SNP appears to be steering along the same course as last year, not bearing attention that everything that Westminster has attempted to do as a stimulus is not working. The banks aren't passing on the rule cuts in rates, lending has yet to pick up. VAT cuts are not stemming the almost daily run of someone from our High Street running to an administrator, of pulling down the shutters one last and final time.

A stimulus requires a reaction, that is why you stimulate. If there isn't a reaction something else is wrong or you've been focusing your attention in the wrong place. All the while nothing is even looking like slowing down or turning around mind you the same people are suffering. Working out not what to spend but what not to spend as their budgets get tighter and tighter. They want, indeed need, to spend if given the opportunity they would happily go back to their previous spending habits. They don't have masses of savings to buffer them, they can't afford to. But give them relieve of the worry and they will spend and create stimulus, which will domino effect up the economic food chain.

But Alex may have more of Gordon in him that he cares to admit. He's a Tim'rous Beastie in the making, one with a loud hailer alright but behind the mouthpiece cowering behind Gordon and Alistair unprepared to be bold for the people of Scotland, happy to settle for the blame game and sweep all the blame down south. So he'll be hoping his Tory friends will now help back his timidity.

Nothing to Pay to 2010: Darling

Well it appears that Alistair Darling isn't going to start to attempt to pay off the latest borrowings on the country's credit card until 2010. It will also be the year after 13 years of Labour reducing the tax burden on the rich while increasing it on the poor that some sort of sorting out of the order of things and some fairness will be returned.

Yes once again after umming and ahing over what to do another plank of the Lib Dem proposals to make the rich take up their more than capable share on their highest level of earnings . Of course yet again Labour will be deferring this, rather that doing it to match the reductions it is proposing at the lower end and in VAT.

Whatever happened to dear Prudence? It appears that Darling has been given permission by Prudence's greatest suitor to leave her out in the cold, when the lack of her (from some quarters) helped to get us into this fine mess in the first place.

Taxes: What Goes Down Will Go Up

In quite the reverse to those magnificent men in their flying machines, that self proclaimed custodian of the world's economic future Gordon Brown has said that while taxes will be cut next week expect them to rise again after. David Cameron in response did come out with the rather good line:

"Tax cuts should be for life, not just for Christmas."

For it does seem that despite calls from the Lib Dems to make the tax cuts permanent and real to the lower paid through restructuring the system making it fairer and closing loopholes for the wealthy, this is a short-term cash bribe. It may well be the sort of cash bribe that previous chancellors have sought to offer just before a general election, whether real or phantom. Indeed while welcoming the tax cut Nick Clegg the Liberal Democrat leader added:

"The right thing to borrow for is not short-term cash bribes but long-term
capital investment in infrastructure the country needs anyway."

Worryingly the Tory's Shadow Business Secretary Alan Duncan said of the twinkled toed wannabe he is shadowing:

"He [Peter Mandelson] has fessed up to what Gordon Brown is not
prepared to admit, that unfunded tax cons now will leave taxpayers with a
cripplingly expensive bill later."

So not just will the tax cut be short-lived we'll be faced with even bigger bills to come. Thank you Gordon for encumbering us with increasing debt, and the bill for it, rather than looking at a sustainable and realistic restructuring of the debt and payment methods.

Is Labour to Follow Lib Dem Tax Policy?

Is Gordon finally going to listen to Vince Cable and the Lib Dem Treasury team? After months years of ignoring Vince Cable's warnings over the banking sector, and now for a couple of months rejecting Lib Dem pleas to cut income tax it appears he has not ruled it out and may be making an announcement soon.

With Dave and George planning to announce plans to call for a cut in Business rates to keep people in work, it may be that Gordon and his Darling are about to trump them. If they cut the basic rate of income tax allowing people to decide just where they need to spend money in these tight times.

Scarily it appears that the Liberal Democrats are leading the country and their economic thinking but the electorate are not realising it when they turn up to vote.