Chancellor may still give go-ahead for 'tycoon tax'

Clegg pushes Osborne to back his tax on super-rich

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.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Marketing Manager

£32000 per annum: Recruitment Genius: This is an an exciting opportunity to jo...

Ashdown Group: Junior Reports Developer / Application Support Engineer

£23000 - £30000 per annum + pension, 25days holiday: Ashdown Group: An industr...

Ashdown Group: BI/ SSRS Developer

£40000 per annum + pension, 25days holiday: Ashdown Group: An experienced BI/ ...

Recruitment Genius: Ecommerce Sales Executive

£18000 - £30000 per annum: Recruitment Genius: A highly successful e-commerce ...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas