Liberal Democrat Tax Plans

4.36.40pm GMT Thu 7th Jan 2010

Underlying all Liberal Democrat tax policy is a strong framework of principles to which all Liberal Democrat tax policies will conform. These are:

· Fairness - tax policies should be equitable and ensure that the payment of taxes is linked proportionately to people's ability to pay.

· Simplicity - tax policies should be clear to taxpayers and new policy should aim to eliminate complexity in existing legislation.

· Certainty - tax policies should not be retrospective and should provide the taxpayer with certainty over the correct treatment.

· Efficiency - tax policies should provide revenue to the government on an efficient basis and minimise tax leakage.

· Transparency - the reasons behind the introduction of new tax policy and the intention of spending of revenue raised should be clearly stated to the taxpayer.

· Competitiveness - UK tax policies should be internationally competitive.

SUMMARY

Under this Labour Government millions of people on low incomes are forced to pay hundreds of pounds in income tax every year, keeping pensioners on the bread line and meaning that for many people in low paid jobs, work simply doesn't pay. Even a person working full time earning the minimum wage sees nearly £1000 taken from them in income tax.

The Liberal Democrats want to radically rebalance the tax system by cutting taxes for people on low and middle incomes, which we will pay for by cutting reliefs, closing tax loopholes that benefit the wealthiest and a 1% levy on properties over £2m.

We propose to raise the threshold at which people start paying income tax from current levels to £10,000, cutting the average working age person's income tax bill by £700 and cutting pensioner's income tax bills by £100. These plans will mean that almost 4 million people on low incomes will no longer have to pay any income tax at all.