The Liberal Democrats' leader, Nick Clegg, argues that his party's tax policies are fairer and more radical than those proposed by his opponents. The package of measures unveiled yesterday suggests the claim has some justification. His proposals are overtly redistributive.
They seek to tax the wealthy more in order to benefit those on low incomes. In contrast to Gordon Brown's stealthier manoeuvring towards similar ends, Mr Clegg and his Treasury spokesman, Vince Cable, are open about their objectives. They have retained their commitment to a so called "mansion tax", but properties will have to be worth at least £2m to incur a one per cent charge. At the party's conference the proposal was for a lower charge to start on houses worth £1m. The Liberal Democrats also propose cuts in pension tax relief for high earners and increases in capital gains tax.
Mr Clegg's plans are in distinct contrast with those of the Conservatives, who have unwisely made a cut in inheritance tax their main priority. They also challenge the current government to be bolder. In particular the increases in capital gains tax would provide an overdue rebalancing of tax between income and capital gains distorted by Labour's anxiety to foster investment.
But while the Liberal Democrats' proposals broadly meet Mr Clegg's claims in terms of fairness and radical sweep they are still not fully credible. During his party conference Mr Clegg called for "savage cuts". In the days that followed there were few examples of savagery. Now he unveils tax increases that will be redistributed to low earners. The redistribution deserves support, but leaves unanswered questions about how the Liberal Democrats would move towards a more balanced budget. Messrs Clegg and Cable must also tread more carefully when announcing their policies in such sensitive areas. Both Labour and the Conservatives would be derided for changing a policy that was announced only a few weeks earlier, as Mr Clegg has done with the "mansion tax".
Nonetheless the Liberal Democrats helped to shape the debate in the 1990s by arguing for higher public spending. In proposing more progressive taxes they play a similarly pivotal role.Reuse content