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Get real, Lord Lawson. It's the low-paid who need our help

March 16, 2014 2:19 PM
By Danny Alexander MP, Treasury Secretary in Daiy Mail
Originally published by East Midlands Liberal Democrats

Liberal Democrat Treasury Secretary Danny Alexander said his party's first priority since the coalition was formed in 2010 has been raising the personal tax allowance

Right from the formation of the coalition in 2010, the Liberal Democrats have insisted that raising the personal tax allowance to £10,000 is our first tax priority.

It was on the front page of our manifesto and it was a top priority in the negotiations that lead to the formation of the coalition.

We have fought to keep this policy on the agenda at every Budget and every Autumn Statement.

Lifting the personal tax allowance helps those on modest incomes and it rewards work, making it ever-more attractive than a life on benefits.

As ever in politics, there are opponents to this policy. Some siren voices in the Conservative Party now cry out that the policy is at the expense of those of the top 15 per cent of taxpayers and we should change our focus away from all workers to this narrower group.

They argue that we should focus less on the raising the personal tax allowance and should instead raise the point at which people start paying the 40p rate.

With one of the leading exponents of this theory also a noted denier of climate change, it is perhaps no surprise that a cool analysis of the facts and figures clearly shows that they are completely missing the point.

The rises in the threshold over this parliament, including the one that comes into effect on April 6, have benefited a significant majority of all taxpayers on the basic and the higher rates.

The facts speak for themselves. The rise in the personal tax allowance in this parliament will benefit over 25 million taxpayers. It will be worth £700 a year to typical basic-rate taxpayers when the £10,000 mark is hit next month.

Higher-rate taxpayers will typically have gained about £500 from the personal tax allowance increases. What matters is how much income tax you are paying - and in both cases income-tax bills have been cut as a result of this Lib Dem policy.

That's why as a party, the Liberal Democrats believe a continued focus on raising the personal tax allowance in this parliament and the next is in the best interests of our economy and our society.

I made it clear at our spring conference last week that further rises would be a top priority for our party in any negotiations that might be required should the British people deliver a hung parliament. We aspire to raise it substantially to £12,500. That's worth another £500 to millions of people.

Nigel Lawson, now Lord Lawson, introduced the 40p tax band in 1988

Those in the Conservative Party who are criticising this policy would better serve the economy and the recovery by getting behind it, not undermining it.

To be frank, there are other tax-and-spend issues that need their attention.

We, like the Conservatives, are committed to sticking to the plan to eradicate the deficit and get the nation's finances on a firm footing by 2018-19.

Tax cutThat means that there is a period of further deficit reduction required after the next General Election. While Labour would turn the clock back to the policies that caused the mess, we know the British economy needs this job finished. But we disagree about how to finish it.

The Conservatives have made it abundantly clear that they will look only to further cuts to achieve that aim.

As Liberal Democrats, we will propose that the further deficit reduction required after the next Election should be achieved by a balance of cuts and asking those with the broadest shoulders to contribute a little more in tax. For everyone else, we'd reduce tax bills further.