Chancellor may still give go-ahead for 'tycoon tax'
Clegg pushes Osborne to back his tax on super-rich
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Wednesday 14 March 2012
George Osborne is seriously considering the "tycoon tax" proposed by Nick Clegg as he finalises the Budget he will deliver a week today.
But the Chancellor has rebuffed the Liberal Democrats' calls for a mansion tax on homes worth more than £2m after David Cameron insisted that the Government should not bring in a new tax. Instead, Treasury officials are examining a proposal by Mr Clegg for all taxpayers to pay a minimum rate of tax, probably 20 per cent – in line with the basic income tax rate.
The Liberal Democrat leader is angry that many millionaires pay a lower proportion of income tax than ordinary workers by employing advisers to help them exploit tax loopholes.
Mr Osborne will use next Wednesday's Budget to announce plans to take out loans that would not be repaid for 100 years or more. He will launch a consultation exercise to test the demand for "super-gilts" or even "perpetual gilts" on which the capital is never repaid but interest is charged forever.
The proposal means that children not even born yet would, as taxpayers, pay the interest throughout their lives on debts built up in the 2008 financial crisis. But the Chancellor believes his surprise move will help future generations by "locking in" low interest rates on a proportion of the national debt.
The UK already issues long-term bonds of up to 50 years, although two, five and 10-year gilts are more common. The last "perpetual gilts" were issued at the end of the First World War.
A Treasury source said: "This is about locking in for the future the tangible benefits of the safe haven status we have today. The prize is lower debt interest payments for taxpayers for decades to come. It is a chance for our great grandchildren to pay less than they otherwise could have expected to thanks to this Government's fiscal credibility."
Mr Clegg floated the idea of a "tycoon tax" at the weekend but it appeared to have been shot down by critics in his own party and scepticism at the Treasury. However, the issue was discussed on Monday by the Coalition's key decision-making body, the Quad: Mr Cameron, Mr Osborne, Mr Clegg and Danny Alexander.
"A minimum tax rate is still on the table," one Whitehall source said yesterday. Mr Clegg is said by colleagues to be confident of seeing some progress on his idea in the Budget. One option is for Mr Osborne to announce a study into whether a "tycoon tax" would work in Britain. But Mr Clegg is pressing the Chancellor to go further – for example, by announcing his backing for the idea in principle so that it could be introduced next year or the year after.
Mr Osborne will announce a crackdown on wealthy owners of expensive homes in London who avoid paying full stamp duty by putting the ownership in companies, sometimes based offshore. He is also expected to bow to Liberal Democrat pressure to speed up the raising of the personal tax allowance towards the Coalition's £10,000 goal.
Tory MPs hope Mr Clegg will, in return, allow Mr Osborne to announce plans to abolish the 50p top rate of tax on incomes over £150,000 a year.
sportLiverpool 5 Norwich City 1: Uruguayan striker has now scored 11 league goals against the club
arts + entsOlivier-nominated actor and singer is set to star in Lloyd Webber's musical about the Profumo affair
filmWith more than 70 per cent of early films lost, archivists are scouring the world to preserve the precious examples that remain
sportThe coach of Chalfont St Peter's under-10s football team was relieved of his duties after he sent an email to parents that said: 'I am only interested in winning'
techA piece of new hi-tech kit aims to get us scribbling again
indybestMake getting out of the wrong side of bed on cold winter mornings a thing of the past with our selection of night-time covers
life + styleClarissa Baldwin is the brains behind the slogan 'A Dog is for Life not just for Christmas'
Work until you’re 70: Chancellor accused of ‘living in fantasy land’ over Autumn Statement pension reforms
What made Charles Saatchi grab my throat, by Nigella Lawson - as she accuses him of threatening to 'destroy' her with drug claims
Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
‘Put it in my mouth’: Viewers outraged by apparent reference to oral sex in VIP e-cig advert
Paul Walker death: Eight-year-old son of Porsche driver Roger Rodas tried to rescue his father
- 1 North Korea: Kim Jong Un 'sacks powerful uncle and has his aides executed'
- 2 The hardwired difference between male and female brains could explain why men are 'better at map reading'
- 3 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 4 A forgotten episode in Russian history leaves links with the Philippines
- 5 ‘Put it in my mouth’: Viewers outraged by apparent reference to oral sex in VIP e-cig advert
£50000 - £70000 per annum + London: Harrington Starr: Senior Automation QA Eng...
£35000 - £50000 per annum + Benefits : Harrington Starr: SQL 2008 R2/2012 Deve...
£38000 - £45000 per annum + Benefits: Pro-Recruitment Group: Creative Audit Se...
£45000 - £50000 per annum + Benefits: Harrington Starr: SQL Developer (TSQL, P...