However, step forward Vince Cable alongside another Liberal leader Nick Clegg with the ideas that really do put the people first. This morning they announced plans that would effectively cut income tax bills for those on low and middle incomes by £700. This will be done by raising the personal tax allowance to £10,000 pounds.
How can this be afforded? Well it will merely be a tax switch, no additional revenue will be required to fund this initiative. The Labour Government already estimates that £10-40bn is lost though tax loops of the most wealthy, those who have led this country into the level of debt we are currently in. By targeting approximately £3-4bn of that lost taxes this aim of helping those on the lowest income can be achieved. By doing so it will lift 4 million out of income tax altogether.
Measures which the Liberal Democrats are proposing to use include:
- Restricting tax relief on pension contributions to the basic rate (why should the top earners benefit proportionately more than those cleaning their offices, indeed normally their relief is just another perk)
- Taxing Capital Gains at marginal income tax rates (basically closing once again one of the loopholes closed by Nigel Lawson that the rich had used to avoid paying the highest rates of income tax. A loophole reopened by Chancellor Gordon Brown)
- Tackling Stamp Duty Land Tax Avoidance and Corporation Tax Avoidance (two of the ways that business have been robbing the hard working for years)
- Subjecting benefits in kind to National Insurance Contributions as well as income tax and applying National Insurance to multiple jobs (why should the perks of the well paid not be taxed when the poorer have to scrimp and safe for some of the same things)
- Switching aviation taxes from per person to per plane and increasing taxation on non-lifeline domestic flights (so those with no option but to fly don't need to worry but the cleaner services like the train, video conferencing, home working etc may become more attractive to those execs who fly weekly of course enough still will for this to still raise revenue)
But why bother, aren't we in a time of low inflation? Well yes the headline rate of inflation is at it's lowest for ages but this is not what those on the lowest incomes experience. Indeed the things that fill their spending at the things that are still going up faster that that headline rate.
Can we still be talking about cutting taxes when the Government are talking about cutting public expenditure? Yes we can. We're not actually talking about cutting the tax raised merely switching the attention from those who are disproportionately over taxed by making those who can afford to pay accountants (like my brother) to avoid paying their fair share at least in some easily to remedy areas. Also cutting public expenditure at this time is going the wrong way we need to start growing again first, although Darling may try and talk you into believing that it all that can be done on Wednesday, but we all see that the Labour Government has run out of ideas.
How much will people lose out and how much will people gain? Well the £700 is the headline figure. £10k will go some considerable way to lifting most of the income of those full time workers on minimum wage out of taxation which is far more than this Government tried to do last year by taxing them more by removing the 10p rate of tax. However, there is a fairness in helping those who can't afford to help themselves whereas looking at the businesses and high earners to burden a fairer share of their responsibility.