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 1391.

    What a great country we are to tell people to work hard at school and college to get a good job, then when you do the government will hit you hard, the harder you do it well, the harder you will be hit. If you stay out of work and do nothing, you get paid by the government....from the people who have worked hard. Clegg is one serious idiot in my opinion.

  • rate this

    Comment number 1390.

    Just a tad naive. It won't happen voluntarily and the real rich have accountants and lawyers to make sure that whatever happens in tax law they will pay less as a proportion of their money than those on low incomes. Anyway the Tories will defend them to the bitter end. Why offend the rich who can offer that lucrative job to an ex-Tory MP.

  • rate this

    Comment number 1389.

    How about collecting taxes effectively under the current arrangements. Close the current loop holes! Or are we saying that this might scare investors away too?

    It sounds like the rich have us by the proverbials whichever way you look at it. We can talk about fairness, but it ain't gonna happen.

  • rate this

    Comment number 1388.

    George Osbourne said on the BBC I have no intention of asking the rich to pay more tax, Tickety-boo old boy if you don't get it by now you never will!

    PS: I do like the idea of the richest woman in the world getting a rise, It's a shame Henry did'nt?

  • rate this

    Comment number 1387.

    'The simple fact is that the rich use services less (ie: private health, eductaion etc.)'
    That is simply rubbish. The charitable tax relief per child in a private school is more than the allowance per child in a state school. Who trained the private doctors? The rich don't use roads then, or police ...?

  • rate this

    Comment number 1386.

    @ 1337. Mike
    I really hope you don't believe politicians.

  • rate this

    Comment number 1385.

    "£200pw spare - hardly "rich" by anyones standards!"

    I am lucky (or hardworking?) enough to earn about that and pay about that level in bills. I often wish I had more £ but even I recognise that £200/week spare is rich by some people's standards. It may well be poor by others but there are plenty of people in the UK who would love to be that poor!

  • rate this

    Comment number 1384.

    1333. ToriesBrokeBritain That is exactly the point. If you tax everyone a flat rate (30% in this case) then the tax system will be fairer for everyone and the more you earn the more you pay. Someone on £10,000 would pay £3000 and someone on £100,000 would pay £30,000.

    Why should the person on £10,000 pay nothing?

  • rate this

    Comment number 1383.

    If everyone was taxed at the same rate no matter what their earnings than I am sure the government would receive more in tax revenues. I am not a high rate taxpayer but if I was in that position I would probably try to use all the available 'dodges'. Surely it is better to get 20% of something than nothing at all because the money is sent offshore.

  • rate this

    Comment number 1382.

    'reducing benefits will save billions but its too unpopular'.

    Utter rubbish. According to a 'government opinion poll' the majority of Brits are only too eager to see the welfare state destroyed. And from next year it will be. DLA gone, ESA only given to those at death's door,and the winter fuel allowance will be next.

    Who can they blame for the empty coffers then?

  • rate this

    Comment number 1381.

    This article ignores that at 100k you lose your personal allowance and pay an effective tax rate of about 66% on the next 18k of income. Flat tax on income with no exemptions and a rate of something like 15% for capital gains will mean its actually better for people to pay the tax!! Does anyone actually feel the money spent today by government is spent well??????

  • rate this

    Comment number 1380.

    I wish people would stop turning political ideology into some sort of religion. It is not about socialism being evil, it is about having a balanced society which incorporates both socialism and capitalism. We can no more function without a society than we can without industry. People, and politicians especially, should stop proselytizing like naive religious fundamentalists! Balance is the key.

  • Comment number 1379.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 1378.

    I do not equate having a disproportionate amount of the country's wealth as any evidence that I am a wealth creator, I also see right through the veneer of representative pretensions from a chancellor whose sole motivation to participate is to self-serve the needs of a plutocratic elite at the expense of equal citizenship. He is at heart indifferent to our plight. His clique is anti-democratic.

  • rate this

    Comment number 1377.

    1308. Mat Porter

    If the wealthiest 1% pay 24% of all income tax (as quoted above), then surely the 'rich' are already paying more?

    The stats quoted, as is so often the case, are meaningless if the other half of the equation is omitted.
    If these people are lucky enough to own a significant % chunk (exc hidden investments of course) of UK wealth then surely it is fair to tax them accordingly?

  • rate this

    Comment number 1376.

    Ask people to pay more tax.

    Any volunteers?

  • rate this

    Comment number 1375.

    1356.Chad H

    Tax burden on wealth? What if the wealth is earned with hard work and tax for the income from which that wealth is created is already paid?

  • rate this

    Comment number 1374.

    If nothing else, this discussion has shown that the problem we have with education isn’t the reserve of the poor!

  • rate this

    Comment number 1373.

    It would also help if the self-employed paid what they should in tax.
    I don't think I know a single self-employed person who pays anywhere near what they should in tax.
    Being employed, and my tax taken through PAYE, I don't get the freedom to choose how much tax I wil pay!

  • rate this

    Comment number 1372.

    It would have been more accurate if Nick Clegg had stated that he wants the rich to pay "even" more tax.
    I earn a 6 figure salary from my 4 day a week academic job. In addition I do consultancy work which earns me another 6 figure sum. I paid 50% tax on about £50K; 40% tax on £110K and 20% tax on £30K of this income. This is a total of £75K. Enough is enough!!


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