Friday, 18 July 2008

Nick Clegg's tax rises

So despairing are some Conservatives about David Cameron's embrace of tax rises that they are giving house room to Nick Clegg's pretensions of being a tax cutter. In one sense, you could credit Clegg with being the heir to Margaret Thatcher: after all, her income tax cuts were paid for by a hike in VAT. In fairness, Clegg's proposals are more progressive. But Clegg is promising two tax rises that will hit middle earners hard: an extra £1000 a year tax for £50,000 earners contributing 10% of their income to pension (something that will particularly hit those who save for old age without employer contributions) and a big rise in council income tax (for many, it will be over £1000) to boot. For them, this is a tax rise. There is certainly a case for raising the threshold at which people pay tax - perhaps by removing some tax credits - but I do wonder how many Lib Dem voters realise that for them, Clegg's tax 'cuts' would leave a big hole in their pockets.

2 comments:

Lee Griffin said...

Purposefully vague on your accusations there? check out this link. This set LIT to a similar level being proposed by the Lib Dems (0.5 p less) and shows that you would have to be living in the cheapest band of house and earning as a household over 50k to start paying any more tax.

Is it really unfair to say that a household earning 30k living in a house that is above the lowest band could save hundreds of pounds a year at the expense of those earning more likely to be over 60k paying a few hundred more?

I can't find any reference to your extra £1000 claim on pension savers so could you point me to where they've talked about that as it does seem a bit off.

Conor Ryan said...

Of course, they haven't talked about the sum of money. But Clegg is clear that he wants to scrap the tax relief on pension payments available to higher rate taxpayers. And that is what it would cost you if you were earning £50k and paying £5k a year into pension, a proportion similar to many employer contribution schemes. So you are penalised for saving for retirement. I agree with you - it would be better if Clegg were more explicit about the losers!