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Clegg: Raise tax threshold further and faster Clegg: Raise tax threshold further and faster
(about 3 hours later)
Nick Clegg has urged the coalition government to go "further and faster" in raising the level at which people start paying income tax to £10,000 a year. Nick Clegg has urged the government to go "further and faster" in raising the level at which people start paying income tax to £10,000 a year.
The deputy prime minister is also arguing many families are at financial "boiling point" and need more relief. The deputy prime minister argued many families were facing a "state of emergency" in their finances and ministers must respond "more rapidly".
The coalition has promised to raise the income tax threshold to £10,000 by the next election, set for 2015.The coalition has promised to raise the income tax threshold to £10,000 by the next election, set for 2015.
Labour said Mr Clegg had "a cheek preaching about fairness and tax". But Labour said the coalition was to blame for the "squeeze" on families.
Mr Clegg's speech to the Resolution Foundation in London follows official figures showing the economy shrank by 0.2% in the final quarter of 2011. In a speech to the Resolution Foundation in London, Mr Clegg attempted to set out a distinctive Liberal Democrat fiscal position by highlighting differences with the party's Conservative coalition partners.
It also comes ahead of the Budget on 21 March, increasing speculation that changes to tax thresholds could be announced. His remarks follow official figures showing the economy shrank by 0.2% in the final quarter of 2011 and ahead of the Budget on 21 March, increasing speculation that changes to tax thresholds could be announced.
Left vs right 'Unfair system'
Mr Clegg will aim to set out a distinctive Liberal Democrat fiscal position by highlighting differences with the party's Conservative coalition partners. Mr Clegg said the "biggest question" facing the country was how the tax burden on people was shared and said the coalition had "called time on the unfair and out of whack tax system".
Ahead of the speech, he told BBC One's Breakfast: "Because things are very tough, because utility bills were much higher last year than many people hoped, because the period of kind of austerity is going to take longer than we originally hoped, I believe we should do this [raise the tax threshold] further and faster. But he said Lib Dem priorities differed from those on the right in politics who placed "less of an emphasis on using the tax system to tackle inequality" and the "traditional left" who supported a "penal rate on the highest earners, simply because it makes them poorer".
"I can't tell you exactly what's going to be in the Budget, because it hasn't been decided yet, but this is very much what I think should be in it."
Mr Clegg discussed the matter with Chancellor George Osborne on Wednesday and Prime Minister David Cameron on Tuesday.
In his speech, the deputy prime minister will say that those on the right in politics place "less of an emphasis on using the tax system to create greater equality".
He will also attack Labour by saying the "traditional left" supports a "penal rate on the highest earners, simply because it makes them poorer".
At the last election, the Lib Dems pledged to raise the income tax threshold to £10,000 a year and the coalition agreed to implement this policy over the course of this Parliament.At the last election, the Lib Dems pledged to raise the income tax threshold to £10,000 a year and the coalition agreed to implement this policy over the course of this Parliament.
The income tax threshold was raised by £1,000 to £7,475 in the 2010 Budget, and the government plans to increase it further to £8,105 this year.The income tax threshold was raised by £1,000 to £7,475 in the 2010 Budget, and the government plans to increase it further to £8,105 this year.
But Mr Clegg is expected to say: "Today I want to make clear that I want the coalition to go further and faster in delivering the full £10,000 allowance, because the pressure on family finances is reaching boiling point. Mr Clegg said he was proud of these measures, as "cutting income tax is one of the most direct tools we have to ease the burden on low and middle earners".
"These families have seen their earnings in relative decline for a decade, compared to those at the top. That has accelerated since 2008, with lower real wages and fewer hours at work." And he added: "Today I want to make clear that I want the coalition to go further and faster in delivering the full £10,000 allowance, because bluntly the pressure on family finances is reaching boiling point.
He will argue that the coalition has raised capital gains tax and reduced tax breaks on pension funds "for the very rich", while "clamping down" on tax avoiders to raise an extra £7bn a year. "Compared to those at the top, these families have seen their earnings in relative decline for a decade. That has got worse since 2008, with lower real wages and fewer hours at work."
'Fair tax cuts' Mr Clegg said the pledge - which would cost an estimated £9bn - had to be fully funded, stressing "we need to find the money and that won't be easy of course".
Mr Clegg will also reiterate his commitment to the coalition's aim of ending the UK's deficit, but will promise to do so "in a way that is fair". But he argued the UK could not afford not to address inequalities in the current system.
"People look to the Liberal Democrats to keep this coalition anchored in the centre ground. They want economic competence, but they want compassion too. 'Unearned wealth'
He also said he would "stick to his guns" in arguing the case for a "mansion" tax on property - aimed at properties worth more than £2m - as part of his plans to tackle "serious, unearned" wealth.
He added: "People look to the Liberal Democrats to keep this coalition anchored in the centre ground. They want economic competence, but they want compassion too.
"It is our job to make sure this government delivers both.""It is our job to make sure this government delivers both."
Owen Smith, Labour's shadow Exchequer secretary, said: "This is the man who campaigned against a rise in VAT and then introduced it just after he got elected. And his government's Autumn Statement took three times more from families with children than from the banks. Mr Clegg discussed his tax objectives with Chancellor George Osborne on Wednesday and Prime Minister David Cameron on Tuesday. But the BBC News Channel's Chief Political Correspondent Norman Smith said although Mr Clegg was pushing hard on the issue none of his demands had been "signed off" by No 10.
"For the last year Labour has been arguing for fair tax cuts, such as a temporary cut in VAT, to help hard-pressed families and pensioners and kickstart our stalled economy. And we want to see a tax on bank bonuses at the top to fund 100,000 jobs for young people. Ahead of the speech, Mr Clegg told BBC One's Breakfast: "I can't tell you exactly what's going to be in the Budget, because it hasn't been decided yet, but this is very much what I think should be in it."
"Now that the economy has gone into reverse, these measures should be part of a real plan for jobs and growth in the next Budget." Labour leader Ed Miliband said it was the coalition government which had put up VAT, cut tax credits and "allowed energy and train companies to rip people off on their bills".
"Finally Nick Clegg has woken up to the squeezing of people on middle incomes," he said. "But the problem is who squeezed the middle? It is this government.
"I don't think people are going to trust Nick Clegg or this government to help the squeezed middle."
Will you be affected by the tax proposals? Send us your comments and experiences using the form below.Will you be affected by the tax proposals? Send us your comments and experiences using the form below.