Liberal Democrat Proposals For Tax Cuts (Tunbridge Wells Liberal Democrats)

Liberal Democrat Proposals For Tax Cuts

November 13, 2008 10:42 PM

Only the Liberal Democrats are advocating a 4p cut in the basic rate which will put money back in the pockets of those who need it the most.

Families are facing a difficult winter. Rising mortgage bills, the fear of unemployment and high heating costs mean that the shockwaves of the financial crisis are being felt in households across Britain. When the banks were in trouble, they got rescued. Millions of families who are finding themselves in trouble must be helped too.

People on low and middle incomes need real, lasting, significant tax cuts now. Only the Liberal Democrats are advocating a 4p cut in the basic rate which will put money back in the pockets of those who need it the most.

Our proposals are affordable and costed - and they will help boost consumer spending in the economy, as well as helping struggling families.

We would also act to lower energy bills so people can afford to keep warm this winter. And we would ensure that banks only ever repossess people's homes as a last resort.

If Labour brings in tax cuts they will be here today, gone tomorrow. We will all pay for them in the end.

The Tories are hinting at small cuts which will do nothing to rebalance Britain's unfair tax system. They still think millionaires are the priority when it comes to tax breaks, not the low and middle-income families who need help now.

The proposals

The Liberal Democrats launched plans to cut the basic rate of income tax by 4p in the pound in July 2007.

The measure is part of a comprehensive tax package, aimed at rebalancing the tax system in favour of low and middle-income earners.

The tax cut is fully funded and would be paid for through green taxation and by closing tax loopholes for the very wealthy including:

· Taxing capital gains at the same level as income tax

· Clamping down on tax avoidance in areas such as stamp duty

· Ending upper rate tax relief on pensions

None of these proposals would increase the government fiscal deficit; that means they are affordable now. This tax cut is now urgent to get money to people who are struggling the most, helping them to pay for essentials and stimulating spending on the high street.

In addition to this we will identify £20bn of wasteful or ineffective public spending, for example abolishing programs such as the child trust fund, child tax credits for higher earners and ID cards. The majority of this money will be redirected to Liberal Democrat spending priorities with the remainder being used to cut the overall burden of taxation, reducing taxes further for people on low and middle incomes.

Why our proposals are affordable

Our proposals are affordable and costed - and they will help boost consumer spending in the economy, as well as helping struggling families.

Unlike the Tories, whose tax proposals are based on 'sharing the proceeds of growth', our tax proposals are not dependent on a certain level of economic growth to be possible. We will pay for our tax cuts by ending upper rate tax relief on pensions, clamping down on tax avoidance, harmonising income and capital gains taxes, increasing green taxation and trimming overall central public spending. Our proposals would not increase the government fiscal deficit. They are affordable now.

Our tax cuts will not only help people to get through these difficult times, they will also boost consumer spending helping beleaguered retailers. We need to get people out of their doors and spending money again to boost demand and increase consumer confidence. The best way to do this is to target tax cuts at people on low and middle incomes who are likely to spend the money because their household budgets are so stretched. This will give the economy a much-needed fillip at this time of crisis.

Although a recession will increase national debt in the short term, neither the Government, the Conservatives nor ourselves are proposing an overall fiscal tightening on the basis that this would further exacerbate the recession. The Government must concentrate on encouraging growth which will help bring the budget back to surplus so that it balances over the whole cycle.

Tunbridge Wells Liberal Democrats