The Budget pledge: we'll take from the rich, and give to the poor

Budget talks focus on taking the lowest-paid out of tax and making the rich pay for it

Millions of workers earning less than £10,000 a year could stop paying tax within two years under the centrepiece announcement of this year's Budget, the Chief Secretary to the Treasury suggests today.

In an interview with The Independent, Danny Alexander said he was close to agreeing proposals with George Osborne to go "further and faster" towards removing low earners from tax. He hinted that the measure could be paid for by toughening up tax breaks on the pension contributions of the highest earners and said that a tax loophole which allows multimillionaires to avoid paying stamp duty could be closed.

His comments were echoed by his party leader, Nick Clegg, who suggested that eventually a specific minimum rate of tax should be written into law to ensure people are "paying their fair share" and not "massaging" the system.

"I think it's time that we look at what I call a tycoon tax," he said. Speaking ahead of the Liberal Democrat spring conference in Gateshead, Mr Alexander said that the Budget negotiations had still not been concluded but he was optimistic that a deal could be done. "This [raising the tax threshold] is our priority," he said. "I'm proud of the progress that we've already made. We want to go further and faster on that in this year's Budget. We're not going to say what we'll do, but people in the party say, can we go faster, and my answer is yes we can."

Currently the Coalition is committed to a "longer-term policy objective" of raising the income tax threshold to £10,000. At the last Budget Mr Osborne announced that the personal allowance will rise by £630 to £8,105 this April, suggesting that the Government was intending to reach the £10,000 goal by 2015. Around 2.2 million taxpayers will stop paying tax as a result.

Mr Alexander's comments suggest the Coalition now intends to move more quickly. He also confirmed that the Liberal Democrats were likely to include a proposal in their next election manifesto that increases the personal allowance to £12,000 – ensuring that no full-time workers earning the minimum wage would pay any tax.

While he remained coy about how the measure might be paid for, he suggested that a tax on higher earner pension contributions and closing the stamp duty loophole which allows individuals to avoid the tax by buying properties through foreign-registered companies would be closed.

"In our election manifesto we set out a number of ways that we would seek to raise more revenue from the wealthiest," he said. "One of those areas was about taxation of property, where tax is dodged wholesale at the moment by the wealthiest, and the other was about tax relief on pension contributions, where we made the point that it was essential that there should be tax relief on pension contributions but that a larger share of that tax relief is going on those paying the top rate of tax.

"As a government we have already made some significant changes which come into place this year, which will reduce that tax rate by about £5bn in terms of reducing the lifetime allowance. We have already made some very good decisions in that area."

Mr Alexander also confirmed that he was "not ideologically wedded" to the 50p tax rate for those earning over £150,000 and suggested that the Government was in the "middle of discussions" on whether it should be scrapped.

Mr Osborne is thought to be in favour of the move, but Mr Cameron is worried that a pledge to abolish it would revive the image of the Tories as the "party of the rich". Mr Alexander suggested he would be happy to scrap the tax rate, but only if other measures were introduced to ensure that the wealthiest in society contributed more.

Meanwhile, Mr Clegg said that he was in favour of introducing new measure to ensure everyone paid a fair rate of tax – rather than a mansion tax."I think the principle of a mansion tax is a perfectly sensible one," he said. "[But] the overall approach to bearing down on avoidance, closing loopholes, making sure the wealthy pay more of their fair share than less — that is what is more important to me."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Ashdown Group: Front-End UI Application Developer

£30000 - £40000 per annum + Benefits: Ashdown Group: Front-End UI Application ...

Recruitment Genius: Digital Account Executive

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Service Engineers - Doncaster / Hull

£27000 per annum: Recruitment Genius: Domestic Service Only Engineers are requ...

Recruitment Genius: Employability / Recruitment Adviser

£23600 - £27500 per annum: Recruitment Genius: The Employability Service withi...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...