Lib-Dem tax plans to hit elderly

Elderly people in care homes will have to pay local taxes under Liberal Democrat plans to scrap the council tax.

Elderly people in care homes will have to pay local taxes under Liberal Democrat plans to scrap the council tax.

The proposals for a local income tax will benefit eight out of 10 pensioners but those in care homes may face bills for the first time. The Liberal Democrats' plans for a local income tax will hit occupants of care homes who are exempt from council tax bills.

Yesterday, party leader Charles Kennedy announced six million pensioners will pay no local income tax at all under their plans. But he admitted pensioners in care homes including those with long-term illnesses may find themselves saddled with bills. The admission is an embarrassment for the party that has put free personal care for the elderly at the centre of its social policy.

The Liberal Democrats say that half of all households will be better off under their plans for a local income tax and a further 25 per cent would be "broadly unaffected" but a quarter of households would pay more and some groups, including people in care homes, would no longer have exemption.

Mr Kennedy who went to Aberdeen and Wiltshire on the campaign trail said those in care homes "will have to pay local income tax but, looking at the figures, that accounts for only 4 per cent of pensioners" .

"Tax should be based on people's ability to pay. The council tax penalises pensioners and low-income families. It's a tax where the poorest 20 per cent of pensioners pay nearly six times more as a proportion of their income than the richest 20 per cent of our population," he said.

Yesterday, there was further confusion about the details of the tax policy. It followed a debacle at last week's manifesto launch when Mr Kennedy seemed unclear about how much a person would have to earn for their bills to rise.

Yesterday, Mr Kennedy said that an average working couple would need to earn more than £42,000 a year "before they would pay even a penny more" . But the figure appeared to contradict last week's assessment by Matthew Taylor, the author of the Liberal Democrat manifesto, who said a couple would have to earn £38,000 before their bills would rise.

Mr Kennedy argued that council tax was unfair because it was based on property prices not on income. On his battle bus tour yesterday, he corrected himself after mistakenly saying in interviews that a typical British household would pay £540 less not £450 less.

Edward Davey the Liberal Democrat local government spokesman said: "Council tax is bad and will get worse unless we scrap it now. Only the Liberal Democrats are offering a solution to the council tax at this election."