Clegg vows to push for mansion tax


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Indy Politics

Nick Clegg pledged today to push for the introduction of a mansion tax as he demanded faster cuts for taxes on low and middle-income earners.

The Deputy Prime Minister is urging George Osborne to introduce a £10,000 personal allowance on income tax more quickly than planned to relieve the growing pressure on household budgets.

He said that the coalition agreement to raise the threshold gradually over the course of the parliament is no longer enough when family finances are facing a "state of emergency".

Mr Clegg, along with Chief Secretary to the Treasury Danny Alexander, will be lobbying the Chancellor ahead of his March Budget for reforms to make the tax system "fairer".

Among the measures he is pushing for is the introduction of a mansion tax, the Lib Dem leader said. The controversial proposal would impose a levy on properties valued at more than £2 million.

In a speech to the Resolution Foundation think tank, Mr Clegg said: "I know the mansion tax is controversial, but who honestly believes it is right that an oligarch pays just double the council tax of an average homeowner even if their house is worth 100 times as much?

"And who seriously thinks we would kill aspiration through a levy on the 0.1% of the population who own £2 million homes?

"The mansion tax is right, it makes sense and the Liberal Democrats will continue to make the case for it.

"We're going to stick to our guns."

In a challenge to his Conservative coalition partners, the Deputy Prime Minister said: "Every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?

"I know which side of the line I stand on - the UK's tax system cannot go on like this, with those at the top claiming the reliefs, enjoying the allowances, paying other people to find the loopholes, while everyone else pays through the nose.

"This is about fairness in the middle. More money in the pockets of the people who need it."

Raising the income tax personal allowance to £10,000 was a Lib Dem manifesto commitment and endorsed in the Coalition Agreement after the 2010 general election.

The first increase in the allowance, from £6,475 to £7,475, was announced in the 2010 Budget. It is set to rise again, to £8,105, in April.

In his speech, Mr Clegg said he wants the coalition to "go further and faster" in delivering the full £10,000 allowance because "the pressure on family finances is reaching boiling point".

"These families cannot be made to wait. Household budgets are approaching a state of emergency, and the Government needs a rapid response," he said.

Mr Clegg did not advocate an increase in borrowing to pay for the cut but called for extra taxes on the richest in society and environmentally-damaging behaviour.

"We need to find the money. That will not be easy, of course, but to those who say we cannot afford to do this, I say we cannot afford not to do this.

"And it is because of the pressure our economy is under that there is now an urgent need to give families more help, an urgent need to rebalance our tax system so it rewards work and encourages ordinary people to drive growth.

"And I can tell you today that this rebalancing will necessitate reform across the tax system, so that those who are better off, or who act in ways that damage our environment, pay their fair share."

He added: "People look to the Liberal Democrats to keep this Coalition anchored in the centre ground.

"They want economic competence, but they want compassion too. It is our job to make sure this Government delivers both."

A source close to Mr Clegg said he wanted to "debate the basic principles of taxation in this country".

"Between now and the Budget, Nick and Danny will be arguing for faster tax cuts for hard-working families, paid for by increasing the amount paid by the richest," he said.

"Times are tough for a lot of people and Nick wants to put money back in their pocket. The case for doing this as soon as possible is, in his view, irresistible.

"The planned steady increase aimed at delivering the £10,000 personal allowance by 2015 just won't cut it anymore."

Mr Clegg made clear that he was setting out "ideas" rather than stating coalition policy.

"I shared the speech with the Chancellor. I was talking to him about it, yesterday and the Prime Minister the day before," he said.

"The budget has not been written, we have not collectively taken decisions about the Budget yet.

"But in exactly the same way that the Prime Minister is perfectly entitled to talk as he has done about the cut in child benefit for upper rate earners without impinging on the Chancellor's Budget decisions, I am setting out idea which are part of a wider public debate... about how we make the tax system fit for purpose in a time of austerity and a time of great economic difficulty."

Downing Street confirmed that Mr Clegg's speech had been cleared with both Mr Cameron and Mr Osborne.

But Mr Cameron's official spokesman made clear that decisions on tax would be made in the Budget in March, and said that negotiations on its contents had not yet begun.

The spokesman told a daily media briefing in Westminster: "Tax is clearly a matter for the Budget and we make tax decisions in Budgets.

"We have a Coalition Agreement which sets out our tax priorities, and in particular says that we will prioritise increases in the personal allowance over other tax cuts.

"The Deputy Prime Minister was setting out his policy priorities. The commitment to increasing the personal allowance to £10,000 was something that was in the Liberal Democrats' manifesto at the last election, so it has been a Liberal Democrat priority for some time."

Asked whether Mr Clegg was speaking as the Lib Dem leader and seeking to push the party's priorities for the Budget, the PM's spokesman replied: "He is the Deputy Prime Minister, so he speaks as the Deputy Prime Minister.

"But decisions on tax are taken in the normal way at Budget time and there is a process that leads up to the Budget."

Labour leader Ed Miliband said: "Finally Nick Clegg has woken up to the squeezing of people on middle incomes, but the problem is who squeezed the middle?

"It is this Government that has put up VAT, this Government that is cutting tax credits and this Government that is allowing energy companies to rip people off on their bills.

"I don't think people are going to trust Nick Clegg or this Government to help the squeezed middle."