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More money in your pocket

April 24, 2009

column-picture1Wednesday was Budget day.

In the run-up, it was billed as one of the most important Budgets since the Second World War.

Whilst the three main parties are now in agreement that, due to the scale of the debt that bailing out the banks has created, there will need to be cuts in public spending, there are clear differences between the parties in respect of their fiscal priorities.

Nick Clegg and Vince Cable unveiled the Liberal Democrat alternative Budget on Monday.

The centrepiece of our proposals is a move to raise the personal allowance for Income Tax to £10,000.

For those earning more than £10,000 this will offer an immediate uniform tax cut of about £700.

The proposal will take 4 million people out of tax altogether, and will be paid for by closing tax loopholes for the very wealthy, and clamping down on tax avoidance.

The clear message from the Liberal Democrats is that people on low and middle income simply pay too much Income Tax.

As Nick Clegg said on Monday,

“This proposal is not a net tax cut, it is a tax switch. Unlike recent Tory tax policy this tax switch is not dependent on growth; it is simply switching the burden away from those on low and middle incomes and on to the wealthiest…

“Even during a recession companies still dodge corporation tax and stamp duty, HMRC itself has estimated that it loses anywhere between £10bn and £40bn in revenue through tax avoidance each year. Moreover with stock markets and the housing market currently low we will likely see strong Capital Gains Tax revenue as markets recover.

“Perhaps most importantly though, this recession has shown that people simply won’t accept that big business and the very wealthy can dodge tax when ordinary people pay a third of their income in tax. This recession give us the opportunity to fundamentally rethink our tax system and make it permanently fairer.

“The current economic crisis has shown more than ever that while millions of people on normal incomes who pay their taxes are struggling to get by, big business and those with savvy accountants can use and abuse tax loopholes to treat tax as optional. This simply isn’t fair and must change.

“Neither Labour nor the Conservatives will change this. We will.”

Couldn’t have put it better myself.

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