A taxing question: The Liberal Democrats are right to push to raise further the threshold at which people start to pay tax

Nick Clegg has little to gain from claiming co-ownership of austerity economics

Editorial
Sunday 17 November 2013 20:10
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One of the Coalition government’s most welcome achievements is the degree to which it has lifted the burden of tax on low earners. When the Tories and Liberal Democrats took office three years ago, Britons started paying income tax at a level of only £6,474. Next March, the benchmark will have risen to £10,000. Now the Liberals Democrats want to go a stage further by nudging it up to £10,500.

Raising the tax bar is a thoroughly good idea. It validates work, offering some reward to people on modest incomes who might otherwise be tempted to forget holding down a job, and just live off benefits.

At the same time, it is good politics for the Liberal Democrats, who need to go into the next election with a flagship policy, and will be aiming to present themselves as the party that took millions of people out of the tax system. If he gets his way on this point, Nick Clegg will be hoping that the 500,000 or so more people taken out of taxation as a result of this reform will remember their benefactor. The timing of the change couldn’t be better for him, either. If it makes it into the next Budget, it will take effect just before the election.

With only 18 months to polling day, all the main parties are scouring the terrain for big issues that voters identify as priorities, over which they can claim political ownership. Evidently, the C0nservatives under David Cameron will be campaigning as the party whose dogged pursuit of austerity got the economy off the rocks. However, Nick Clegg has little to gain from claiming co-ownership of the austerity economics. In the absence of a feel-good factor, Liberal Democrats scent few potential votes in it, and suspect that people who view cutting the deficit as crucial are likely to vote for the Tories in any case.

Instead, Nick Clegg and Ed Miliband will be battling it out on similar territory, over the cost of living. With Labour trying to maintain the surge it has gained from pledging to freeze energy bills – this week moving the focus on to a guarantee of free child care for up to 25 hours a week – the Liberal Democrats have their work cut out keeping tax in the public eye.

The Labour leader’s ambitious pledges to cut living costs are not the only problem facing Mr Clegg. As the Tories find the struggle to bank any credit for turning round the economy increasingly hard going, they will be casting covetous eyes towards Liberal Democrat territory and, among other things, trying to remind voters that it was a Tory Chancellor, George Osborne, who made reality Liberal Democrat calls to raise the tax threshold.

Voters should not let the Conservatives get away with it. The Liberal Democrats have fought a tough corner on taxes on the poor and deserve the credit for gains that have been made. The Tories have been more enthusiastic about championing tax cuts for the rich, which is why Mr Osborne pressed on with cutting the top rate of tax from 50 to 45 per cent. Back in 2010, Mr Cameron described Liberal Democrat calls to cut tax rates at the bottom end as a nice but unaffordable idea. He has since changed his mind, but let’s not forget who persuaded him to do so.

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