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Nick Clegg highlights Lib Dem plans to tax rich in Eastleigh campaign speech

February 7, 2013 11:35 AM
By Patrick Wintour in The Guardian
Originally published by East Midlands Liberal Democrats

Nick CleggDeputy prime minister will portray Liberal Democrats as party of fair tax in speech to mark beginning of byelection campaign.

Nick Clegg will say the coalition has already made the tax system fairer than it was under Labour. Photograph: Oli Scarff/Getty Images

Nick Clegg will claim the mantle of the fair tax party on Thursday in a speech designed to fire the starting pistol for the Eastleigh byelection due to take place on 28 February.

The Liberal Democrats will issue the writ for the byelection in the wake of the resignation of the sitting MP Chris Huhne, after he pleaded guilty to swapping penalty points with his wife for speeding. The leader of the Liberal Democrat Eastleigh council has warned that the campaign will be bruising.

In his speech, Clegg will insist his party wants the rich to pay more in tax, but claim it has already done more to make the tax system fairer than Labour.

He will say: "Fair taxation has been a thread running through the last two and a half years. It has guided our tax reforms; it has shaped my personal priorities in government. Indeed, fairer tax has been a theme of my leadership of the Lib Dems.

"In less than three years we have done more to correct the grotesque unfairness in the tax system than Labour managed in 13."

He will also defend the cut in the 50p top rate of tax, pointing out that the respected Institute of Fiscal Studies said this week that "the combination of the 45p income tax rate, the removal of the personal allowance for the highest earners, and reductions in the tax-free element of their pension pots together mean the wealthiest 10% of people are making the greatest contribution following the government's tax changes".

Clegg will also say: "In every single year of this parliament the rich will pay a greater share of our nation's tax revenues than in any one of the 13 years that Labour were in office."

He will describe Labour's anger over the 50p rate as synthetic, pointing out that "the previous government only had it in place for 36 days out of a total of 4,748 days in office".

Clegg will say tax is at the heart of the biggest question in British politics today: "When the public finances are so tight, and millions of families across Britain are feeling the squeeze, who do we ask to give a bit extra?

"For me, the answer is simple: those with the broadest shoulders should bear the biggest burden."

He will call for the very wealthy to make a modest extra contribution. He says his preferred option is a mansion tax: a 1% levy on properties worth more than £2m, applied just to the value over and above £2m.

"Or, alternatively, we could introduce new council-tax bands at the top end, again affecting properties worth over £2m but integrated into an existing tax system.

"Right now there are properties for sale for tens of millions of pounds around Regent's Park. Whoever buys them will pay the same in council tax as a family living in a three-bed semi in Lewisham." In a dig at the Tories he will say: "It's an open secret that our Conservative partners do not share our views on this."

"Our approach is simple: taxes on mansions; tax cuts for millions. An approach to tax that puts payslips before palaces, if you like."

The Liberal Democrat leader will also highlight that this April the personal allowance will be £2,965 higher than in 2010, arguing that more than 20 million basic-rate taxpayers will be - in total - £600 better off.

He adds: "2.2 million of the lowest earners will pay no income tax at all."

He will call for other changes to the tax system, including dealing "effectively with wealthy individuals and big corporations who set up elaborate schemes to avoid tax". He will argue: "Just as it is right for the tax system to encourage good business, it is equally as important it rewards hard-working individuals."

Tapping into public anger about tax avoidance by big multinational corporations, Clegg will say: "It's a sign of the times that people form views about their coffee houses, search engines and booksellers on the basis of their tax returns.

"Now, more than ever, there is a growing sense within the public debate that how you approach tax says something about who you are."

A Lib Dem source said: "It's a speech that sets out the distinctive approach of the Liberal Democrats in the Coalition Government when it comes to tax."This is going to be a very keenly contested byelection and Nick is eager to remind the voters of Eastleigh, as well as the rest of the country, that the Liberal Democrats are cutting taxes for those on low and middle incomes."

Rachel Reeves MP, Labour's shadow chief secretary to the Treasury, commenting on Nick Clegg's speech on tax fairness, said: "This is a laughable speech from an increasingly desperate Nick Clegg. He campaigned against a VAT rise, but then delivered it after the election. He failed to deliver a mansion tax, but went along with a £3 billion tax cut for the richest. And his cuts to tax credits will dwarf any gain from the rise in personal allowance for millions of working families."

The Lib Dems are expected to select their candidate at a hustings on Friday.