Gordon Birtwistle & Burnley Liberal Democrats

Today the Liberal Democrats are launching our new proposals for tackling inequality and environmental damage by reforming the tax system. I believe these proposals are the most progressive launched by any party in recent history. They are the result of 12 months work by the party’s Tax Commission set up by the Federal Policy Committee, made up of a cross section of party members…………

The Commission was asked to look at ways of reforming the tax system to make it fairer, simpler and greener. I believe we have achieved all three of these goals and put together a credible and balanced package that we can campaign on and will be popular with voters.

Our proposals would lift two million people on low incomes out of direct tax altogether. We would reduce the burden on millions of households and individuals on middle incomes.

Compared with our policy at the last general election of a 50p rate on earnings over £100,000, which raised approximately £5 billion a year, our new proposals envisage an annual tax switch of about £18 billion – without the need to raise taxation overall. We would raise this money by scrapping tax breaks for the very rich such as their pension contribution relief and capital gains tax relief, and by increasing green taxes so that polluters pay the price for degrading the environment.

Fairness lies at the heart of our tax proposals.

Our £18 billion tax switch comes on top of our pledge to scrap the unfair and unpopular Council Tax and replace it with a local income tax based on ability to pay.Â

The current system of taxation is not fair. The bottom 20% of households pay proportionately more of their income in tax than the richest 20%. There has also been a marked increase in wealth inequality since Labour came to power.
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Despite the rhetoric, levels of green taxation under Labour have been falling and these taxes are failing to achieve substantial behaviour change. The Conservatives talk about the environment but aren’t willing to make the tough choices necessary.

Climate change is the biggest threat we face.

Therefore, central to our new proposals is an £8 billion emphasis on green taxes. This is designed to encourage cleaner, greener travel and living and discourage pollution and environmental damage.

Gordon Brown has built up a vastly complicated tax system that puts an onerous burden on individuals and businesses alike. We propose to make the tax system simpler, removing complex reliefs and cutting the number of tax rates rates. And we would make it more transparent and predictable so that businesses can plan for the long-term.

In parallel with these tax changes we are looking at Government spending to identify low priorities which we would cut in favour of spending on our priorities.Â

Our package would radically shift tax and spending priorities while maintaining financial responsibility.

The plans will be debated at the Liberal Democrats’ conference in September in Brighton and your local party representatives will be casting their votes on them. But I want as many members as possible to consider and discuss the proposals. To help do that, Edward Davey MP interviewed me in detail about the plans for a video on our website. Please feel free to watch it and send the link to others as well.

I am also eager to receive your comments which can be emailed to tax@libdems.org.uk.

Finally, let me sum up what I feel these tax proposals achieve: an end to income tax for two million low earners; the end of the Council Tax; a lighter burden for many on modest and middle incomes; strong measures to tackle carbon emissions and pollution and a simpler tax system.

I am looking forward to the debate at conference but if you want more information, you can find the full tax proposals on our website.

Yours sincerely

Vince Cable MP
Liberal Democrat Shadow Chancellor

P.S. You can register online for our conference which will discuss and debate these proposals.

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