Ashdown caught short on income tax strategy

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The Liberal Democrats yesterday upstaged themselves on a commitment to impose an extra penny on the standard rate of income tax.

Introducing a pre-manifesto policy statement at a London press conference, Paddy Ashdown repeated the long-standing formula that an extra penny "may be necessary" to pay for an extra pounds 2bn to be invested in education.

The Liberal Democrat leader added that the final tax decision would be disclosed in a speech being planned by Malcolm Bruce, the party's Treasury spokesman.

Unfortunately, Mr Ashdown had clearly not read the policy statement he was unveiling, "Priorities for Britain".

There was some confusion and embarrassment when The Independent pointed out that the document said: "We will invest at least an additional pounds 2bn per year in education. We will raise an extra 1p of income tax to pay for this."

A number of other policy shifts were revealed by the paper - including a reduction from "up to 750,000" to "nearly half a million" in the number of low-pay employees who would be taken out of the income tax net - a redistributive move financed by a new 50 per cent top rate of income tax for people with a taxable income of more than pounds 100,000.

The Treasury calculates that 140,000 people would pay an extra pounds 1.4bn with the new 50p, higher rate tax band, and that 470,000 people would be freed from tax, at a cost of pounds 1.2bn, if personal allowances were increased by pounds 200.

Mr Ashdown said: "Only the Liberal Democrats guarantee to invest in education, invest in Britain's long-term prosperity, put patients first in the NHS and look after the environment.

"Britain needs the Liberal Democrats to tell the truth about what needs to be done, what it will cost and how we will pay for it."