The Lib Dems and a taxing subject
For a long time, the Liberal Democrats prided themselves on being the one party prepared to say that taxes should go up - do you remember the penny for education? (By the way, it was always called "a penny on tax" because a shockingly high number of voters appeared to think it meant they'd pay 1p more tax, not 1% more.)
Then Nick Clegg announced he'd lead a party of tax cutters who were tough enough not only to cut public spending, but also to hand back some of the dividend to hard-pressed tax payers.
Today, he unveils another approach - or more precisely, a refining of the approach which was shot down in flames at his conference - to promise tax cuts for the many (in the form of a higher personal tax allowance) paid for by tax rises for the few (a "mansion tax" now re-worked so as not to hit voters in Lib Dem marginals; cuts in pension tax relief; increases in capital gains tax and our old friend "closing loopholes".)
The proposals raise two questions:
• How "rich" do you have to be before you lose out? Someone on around £50,000 who put 10% of their income into a pension would, I'm told, lose as much in tax relief as they would gain from the higher tax allowance. Of course, the less you put into your pension (and many put less than 10%), the higher income you could earn before you become a loser.
• Clegg has warned of the need for "savage cuts" in public spending. Won't the next government - whoever forms it - have to hike taxes in some of the ways he describes to reduce the deficit or mitigate those savage cuts and not to pay for tax cuts? Already the government is restricting top-rate tax relief on pensions to those earning over £150,000, and it's likely to go further in the future
Below is a table showing how the Lib Dems cost their tax-cutting & tax-increasing proposals:
Update 1220: Thanks to those of you who have pointed out that the singular of "pence" is "penny". First paragraph amended.