George Osborne downplays Nick Clegg's 'rich tax' call


George Osborne: "I want the wealthy to pay more but I do not want to drive wealth creators away"

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Chancellor George Osborne has warned against "driving away" the UK's "wealth creators" after Deputy Prime Minister Nick Clegg called for a temporary additional tax on the rich.

Mr Clegg argued that those of "very considerable" means should pay more into the system, leading to an angry reaction from several Tory MPs.

He said this should come in addition to the Lib Dems' proposed "mansion tax".

But Mr Osborne said it was important not to deter business from the UK.

In recent weeks there have been several reported clashes between Liberal Democrats and Conservatives over issues including House of Lords reform, airport expansion and plans to redraw boundaries for House of Commons seats.

'National effort'

In an interview with the Guardian newspaper, Mr Clegg appeared to highlight differences over fiscal policy, by suggesting the government could go beyond his own Liberal Democrats' current policy for a "mansion tax" on properties of a high value.

He said: "In addition to our standing policy on things like the mansion tax, is there a time-limited contribution you can ask in some way or another from people of considerable wealth so they feel they are making a contribution to the national effort?" he said.

Mr Clegg said fairness was key to the next steps in tackling the "longer economic war".

"While I am proud of some of the things we have done as a government, I actually think we need to really hard-wire fairness into what we do in the next phases of fiscal restraint," he said.

"If we don't do that I don't think the process will be either socially or politically sustainable or acceptable."

The tax idea is expected to be debated at next month's Lib Dem conference in Brighton, with party sources suggesting Mr Clegg could eventually present it to the cabinet.

But, during a visit to Sunderland, Mr Osborne said: "I am clear that the wealthy should pay more, which is why in the recent budget I increased the tax on very expensive property transactions.

"But we also have to be careful as a country we don't drive away the wealth creators and the businesses that are going to lead our economic recovery."

For Labour, shadow Treasury minister Chris Leslie said: "Nick Clegg is once again taking the British people for fools. He talks about a tax on the wealthiest, but he voted for the tax cut for millionaires in George Osborne's Budget.

"And he has supported a failing economic plan which has pushed Britain into a double-dip recession and is leading to borrowing going up by a quarter so far this year."

Income tax graphic

Mr Clegg's comments provoked criticism from Conservative MPs.

Bernard Jenkin, who chairs the Commons Public Administration Committee, told the BBC: "If the politics of envy made a country rich, we would be a very rich country.

"I think most rich people are contributing far more in tax than other people.

"I know this is not a fashionable view, but if you go on raising tax on rich people - and that's why, in agreement with Nick Clegg we have had to cut the top rate of tax from 50p to 45p - you drive wealth abroad.

"This is a pre-conference, easy-clap line."

Fellow Conservative MP Mary Macleod said: "This is Nick Clegg saying let's try out a few ideas before party conference, probably will cheer up a few Lib Dems to talk about it. But it isn't government policy."

Discussions about tax and spending will take place before the chancellor's autumn statement.

In his interview, Mr Clegg also hinted at a return to cabinet for former Treasury minister David Laws.

Lib Dem Mr Laws resigned as chief secretary to the Treasury two years ago after admitting he claimed expenses to pay his partner rent.

"I have never made any secret of the fact that I want to see David Laws back in government," Mr Clegg said.

He also promised the coalition would stand by its commitment not to build a third runway at Heathrow, despite growing calls from Tory MPs for a change of heart.


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  • rate this

    Comment number 851.

    Increased tax for the wealthy does not get to the root cause of the problem. The problem is a tax system that is so complicated and deliberately so full of holes that billions in tax is lost every year as monies are squirreled away into offshore accounts and clever corporate smoke and mirror accounting. The Government should learn to live within its means. No Trident and no foreign wars.

  • rate this

    Comment number 850.

    806 everyone has the same chance in life most are to lazy to work my next door neighbor could not even sign on age 17 to lazy to do that at least one less claimant

  • rate this

    Comment number 849.

    Lets get all this in perspective shall we? The government has given all our hard earned taxes to the banks, the banks aren't playing ball, now the government is skint! Does this sound familiar?

    The 'rich' and their businesses spend alot on bureaucracy and corporate tax and they ask for help when things get tough - the government ignores their plea! Good luck in asking for more money!!

  • rate this

    Comment number 848.

    "The fairest way is to say everyone pays e.g. 20p in every £1 earned in tax. So
    Mr A gets gross £25,000 pa and pays in tax roughly 5000 a year
    Mrs B gets gross £100,000 pa and pays in tax roughly 20,000 a year."

    And if it costs £20k just to live? What incentive is there for Mr A not to just live off benefits?

  • rate this

    Comment number 847.

    Actually Limited companies do not prevent paying the top rate of tax even income is provided as Dividend. It does however avoid the payment of National Insurance - both the employees NI and the employers NI.
    This would be fixed if NI was changed to Income tax. The only problem with doing this is it would reduce peoples pensions considerably as they do not pay NI.

  • rate this

    Comment number 846.

    The old argument that rich people and corporations will leave if you put taxes up.
    British people and companies should pay tax no matter where they are, Britain or abroad. If they don't pay, then they forefit their passports or stockmarket listing.
    However, none payment of tax needs to be sorted at all levels, including cash in hand domestic traders.

  • rate this

    Comment number 845.

    "I'm not saying raise wages excessively, that'd be silly, just introduce more equality into the system at the lower end"

    Start increasing wages and you will LOSE jobs - more will go abroad and UK companies will be less competitive. Reducing taxes is a better option as people earn the same buy KEEP more of what they earn. Scrapping employers NI might work as well as it reduces employment cost.

  • rate this

    Comment number 844.

    I cannot think of a single policy / announcement by Nick Clegg that hasn't been either irrelevant or just plain daft. This latest piece of inept politics is clealry designed to give his dwindling band of followers something to talk about at the party conference - after that he'll disappear back into his burrow.

  • rate this

    Comment number 843.

    @768 Rob. '..Stop ALL self employment tax schemes and corporate tax evasion loopholes and make EVERYONE go on PAYE....' ??!!!

    So it's the self-employed that are to blame ? Presumably the cash they invest in a busines should be paid in tax to underwrite paid holidays, sick pay, company cars, health insurance etc. for PAYE employees.
    You should try SE you wouldn't last a month!

  • rate this

    Comment number 842.

    I've come to look on Clegg and Cable as malign. Their mansion tax presumably adds on top of the G-band Council Tax and if you buy a £2M home you're clobbered for £100,000 stamp duty, Isn't that enough? Worse these tax levels never change. They'll be there when the average home costs £2M just as death duty now threatens about 15% of the population, Thank God that pair will never get into power

  • rate this

    Comment number 841.

    Isn't it ironic that the ppl yelling "tax the rich" are mostly the ones who said CEOs didn't deserve their £ & they could do their jobs better?
    Tell you what, go get a CEO job. Pay your tax, be rich yourself.

  • rate this

    Comment number 840.

    Another way of looking at this

    What this shows is a massive social restribution of wealth from people who are not particularly wealthy to people claiming benefits (since 35% of all gov't income goes on welfare payments.

    Most moderately paid workers know the injustice of paying high taxes whilst lifestyle benefit claimants receive the same income for doing nothing apart from having children

  • rate this

    Comment number 839.

    Surely we are not over taxed as a nation either rich or poor. The argument should not be for more tax but less spending. Why would anyone argue for more tax? why not more care in spending our hard earned money, again rich or poor

  • rate this

    Comment number 838.

    How about Mr Clegg gets more people in employment and thus more tax as apposed to taxing the rich to pay for a lifestyle whereby people are better off not working and claiming benefits as opposed to working. Working should always be the preferred option which will boost the economy as a by-product.

  • rate this

    Comment number 837.

    Wealthy create jobs, more jobs mean higher employment, production, output, higher taxes mean many will be looking into opportunities to leave the country and settle businesses or work elsewhere, killing golden goose? very shortsighted!

  • rate this

    Comment number 836.

    Change British Culture from Dizzy Rascal music to what Britain ROLE MODELS for success once were and we'll get back to normal.

  • rate this

    Comment number 835.

    Does Clegg not know the wealthy do pay more tax.

    If everyone was to pay the same tax per £ from say £10k ( a flat rate ) that would be very fair. The poor would not pay very much and the wealthy would pay more by virtue of the fact they earnt more.
    People object to in equalities.
    Just for the record I am retired and get so little I dont even pay tax.

  • rate this

    Comment number 834.

    The government should concentrate on minimising internal £ wastage and tighten up their own procedures before they go after the man on the street. Because senior civil servants are spending other people's money, there is no incentive for efficiency.
    Then they should close the tax avoidance loopholes used by business and the ultra-rich.
    Put your own house in order first Cleggie...

  • rate this

    Comment number 833.

    Most £1m + a year earners in the UK are entrepenures who own/run small to medium sized businesses and employ a great deal of the UK population. Plenty of these businesses as well as their owners are completely mobile. If Clegg, with all the foresight of a lemming, continues his witch hunt against the wealthy, these people and the jobs they create will leave the UK!

  • rate this

    Comment number 832.

    55.6% of the Income Tax Collected paid by top 10%, 89% by the top 50%!
    And why is that? Because the wealth disparity in the UK is already out of control. There is a small number of corporations and individuals that already own the majority of all wealth, so although your figures may shock some, it isn't enough compared to the amount of money they actually earn/horde/hide/funnel out.


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