Nick Clegg has declared that he will veto George Osborne's plan to abolish the 50p top rate of tax. He warned that cutting it could "destroy" public support for the entire tax system and provoke a taxpayer revolt. In an exclusive interview with The Independent, the Deputy Prime Minister promised the Government would do more to kickstart the economy in a "Plan A-plus", including a boost for housebuilding.
Mr Clegg issued the clearest possible warning that he would not allow the Chancellor to bow to pressure from business leaders and Conservatives to axe the 50p rate on earnings over £150,000. Speaking on the eve of the Liberal Democrats' annual conference in Birmingham, Mr Clegg said: "What I, and any government including Lib Dems, are interested in is lowering the tax burden on the millions of people on lower and middle incomes – not rushing to make sure the very, very richest pay less tax. It would be utterly incomprehensible for millions of people who work hard, do their best for their families, and play by the rules, if suddenly the priority is to give 300,000 people at the very, very top a tax break.
"It is not going to happen – certainly not until there is significant progress on giving tax breaks to those on lower and middle incomes." Mr Clegg made clear that the Liberal Democrats would back abolition of the 50p rate in the long run only if it is not raising much revenue and if it is replaced by new taxes on "unearned income". These could include a 1 per cent annual "mansion tax" on homes worth more than £2m, a land tax, and restricting tax relief on pensions to the basic 20p rate.