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 1600.

    A radical tax regime: every adult gets £6K / annum tax free from the government, and is then taxed at 35% on everything they earn. Everyone's treated the same, there's no benefits trap, people can take small jobs without affecting their state payments, and there's still the motivator that if you do well you can get the rewards.

  • rate this

    Comment number 1327.

    Of course, extra taxes must indeed be better spent than many taxes currently are. I do not want the wealthy to pay more tax simply to fund war overseas, to buy bigger aircraft carriers, or to enable the government to pay out more in purchasing services from the big corporations who sponsor their party. Any extra revenue must be well spent.

  • rate this

    Comment number 1325.

    I dont see how throwing another wedge of cash into the black hole created by politicians is going to get us out of recession. It wont create any growth. This is the last nail in the coffin of LibDem chances of any electoral survival.

  • rate this

    Comment number 900.

    The wealthiest already pay more tax!! To use very simple figures (that dont correspond to the tax rates etc)
    10% if £100 = £10
    10% of £1000 = £100
    10% of £10,000 = £1000
    So even if we all pay the same tax rate those who earn more would still pay more!! Its very simple maths.
    Better to create more jobs right across the board, from rich to poor and increase the tax revenue that way!

  • rate this

    Comment number 684.

    A flat tax is the only way to really tax the wealthy. Last year I earned 6 figure salary but had enough of being squeezed into paying more tax... So I changed my income structure, now I earn minimum wage but get dividends every month. It cost me about £1800 in accountancy fees but I pay 2k less tax a month . I.e. if the govenment didn't kill the golden goose I would be paying 24k more in tax.


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