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NATIONAL POLICY  >  Economy

ONLY ONE TAX INCREASE - ON INCOME ABOVE £100,000 PER YEAR

 FREEDOM TO THRIVE 

 26th March 2005

A stable, well managed economy

We advocated and welcomed the decision that interest rates should be set independently by the Bank of England, but there needs to be more independent scrutiny and discipline in monetary and fiscal policy. Rather than setting a specific inflation target, the government should set a framework, and the Bank itself should decide the most appropriate inflation measure to target, and the appropriate level to aim for. Similarly, Retail Price Index calculations should be independent of government, and there should be greater independence for the independent members of the Bank of England Monetary Policy Committee. We would enhance the government’s fiscal rules by giving the National Audit Office the power to scrutinise the budget figures, including public borrowing, so no Chancellor can fiddle the figures.

The Problem of Personal Debt

The current level of personal debt and the related property market ‘bubble’ are signs that the economy could be heading back to the days of boom and bust. This cannot carry on. The government has to accept responsibility for reining in irresponsible credit expansion in respect of mortgages and personal loans. We will curb misleading advertising and anti-competitive practices by promoters of credit cards, hire purchase and loan insurance, end the tidal wave of unsolicited credit promotion, and crack down on loan sharks.

Fairer, Simpler Taxes

Under Labour ordinary hardworking families pay more as a share of their incomes in tax than the very rich; the elderly have to sell their homes to pay for their care; and rising Council Tax and university top-up fees are making the system even more unfair. Liberal Democrats want to make the tax system fairer and simpler. To this end we will axe the unfair Council Tax and replace it with a local income tax based on people’s ability to pay. We will also ask the richest 1% of the population - the people who can most afford it - to pay 50% tax on that part of their income over £100,000 per year. This will allow us to deliver in England policies that people in Scotland already benefit from thanks to the Liberal Democrats in government there: no top-up and tuition fees, and no elderly people having to pay for their care.

Fairer, Simpler Taxes

Under Labour:

-  ordinary hardworking families pay more as a share of their incomes in tax than the very rich;
-  the elderly have to sell their homes to pay for their care;
-  and rising Council Tax and university top-up fees are making the system even more unfair.

Liberal Democrats want to make the tax system fairer and simpler. To this end we will axe the unfair Council Tax and replace it with a local income tax based on people’s ability to pay.

We will also ask the richest 1% of the population - the people who can most afford it - to pay 50% tax on that part of their income over £100,000 per year.
This will allow us to deliver in England policies that people in Scotland already benefit from thanks to the Liberal Democrats in government there: no top-up and tuition fees, and no elderly people having to pay for their care.


Read more with:

-  Economy: Prosperity at Home and Abroad - Policy Briefing - February 2005
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 Government must set clear priorities for spending - Cable

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 Assessment of fiscal policy must be made by independent body - Cable

YOUR VIEW...
    > Economy
    19th October 2005, by Cyril

    About tax, there is a taxing debate about Flat Tax rates.

    Basically, the Conservatives are opening the debat again on lowering taxes, but also on ehat they call "simpler, fairer and flatter taxes too". According to the article in the Guardian, "in its purest form, a flat tax is applied to any income, whether personal or corporate. Tax credits and exemptions do not exist, making it nearly impossible for companies and high earners to evade taxes.". They are taking Russia as an example where it works.

    Really? Russia as an example?Maybe due to the very high level of tax evasion that have occured in the past, or the "mafia" way of business... I hope than UK prefers to compare with EU states rather than with Russia!!

    Even supporters say that the cost will be huge (at least initially) and "The rightwing Adam Smith Institute, one of the few groups to have produced detailed proposals for a flat tax has admitted that its plan for a 22% rate, with a personal allowance of £15,000, would result in an initial £60bn loss in annual government revenue" the article said.

    I do not think that people ar looking for less public services, less State spending. They might very well seek better spending, but the Conservatives under-investment in our public transport and NHS system have shown in the past what happens, and the huge consequences for future generations of this theory.

    And about the "fairer" wording it must be a laugh. I do not see any fair in everyone paying the same despite their income. And as some comments suggest, if cutting taxation benefits everybody how come Thatcher’s tax cuts were accompanied by unemployment doubling to 3 million between 1979 and 1983 ?

    What we need is a fairer system, YES. But it looks like this is just what the Libdems are offering by asking the richest 1% of the population - the people who can most afford it - to pay 50% tax on that part of their income over £100,000 per year, and by promoting a fair Council tax system.

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