Search

Lib Dem tax policy is a major shift

PUBLISHED: 11:07 14 June 2006 | UPDATED: 11:00 22 October 2010

CHRIS FISHER, EDP Political Editor

Given the great emphasis placed by the Liberal Democrats on the Iraq war, there was no little irony - and, their detractors might also say, no little justice - in the launch of their new taxation policy being heavily overshadowed last week by reports of the death of Abu Musab al-Zarqawi.

Given the great emphasis placed by the Liberal Democrats on the Iraq war, there was no little irony - and, their detractors might also say, no little justice - in the launch of their new taxation policy being heavily overshadowed last week by reports of the death of Abu Musab al-Zarqawi.

What proportion of the country's population has any awareness at all that Sir Menzies Campbell has, at a stroke, radically changed his party's stance on taxation? I should think it is pretty small. But the development is potentially significant, notwithstanding the facts that the Lib Dems remain very much the third party and have been pushed back in the polls by David Cameron's Tories.

For a start, many political analysts currently still think that a hung parliament is more likely than an outright Tory victory as the outcome of the next general election. The arithmetic of our electoral system strongly supports them. The Conservatives need to be about 10 percentage points ahead of Labour to get a Commons majority of their own.

If, moreover, there were no single-party majority, a Tory-Lib Dem coalition would be a substantially stronger possibility than a Labour-Lib Dem one. Common sense tells us that the Lib Dems would rather have an arrangement with a party on the way up than with one that was sinking and had just been deprived of its Commons majority. Furthermore, Sir Ming is plainly attempting to reposition his party. Under Charles Kennedy it got into the extraordinary situation of being widely perceived as standing to the left of Labour. And there was a price to pay for that in the last general election.

Generally speaking, the Lib Dems did considerably better when they were trying to take seats off Labour than when they were trying to capture them from, or hold them against, the Tories. And that was before Mr Cameron's new fluffy version of Toryism made its appearance.

The perception of the Lib Dems as left-wing was not entirely because of Iraq. The party also had a long standing commitment to the redistribution of income, and stood out by having a commitment to a 50pc top rate of income tax (on annual incomes of above £100,000).

Sir Ming has now shown he is intent on abandoning that idea. "The 50p rate was an important symbol that we are a redistributive party," he declared last week. Note the "was".

In addition to getting his party to scrap the 50pc tax pledge, he wants it to commit itself to abolishing the 10pc starter rate of income tax, raise the annual income threshold for beginning to pay the tax to slightly over £7000, cut the basic rate from 22pc to 20pc and raise the threshold for the 40pc higher rate to £50,000. In support of this plan he stated: "I want to redefine our approach to tax to reflect the growing sense in many low income and middle class households that taxes are unfair, over-complicated and penalise hard work."

No overall cut in the state's tax-take is envisaged, however. So where is the money lost to be recovered from? By "raising taxes on those who pollute the environment and on the very wealthy". Interesting, but much easier said than done.

As awareness of the dangers presented by global warming increases, the public is no doubt becoming more attracted in principle to green taxation. But politicians in or aspiring to government still have to tread very carefully in this regard. How many voters with cars are up for a sharp rise in fuel duty?

There are also problems in squeezing the rich. They won't like it. Some are great job-creators. And in today's global, IT economy it is much easier than it was for them to show their displeasure by shifting their assets and themselves to places where they will get a better deal.

Sir Ming and his advisers have more thinking to do. But he deserves praise for this first step. He has recognised that his party needs to sharpen up its act and pull itself up from the sofa of soft, urban middle class liberalism that it sank into with Mr Kennedy. His tax proposals are also the best answer yet to the mocking suggestions - triggered largely by his hesitant performances in Prime Minister's Question Time - that he is past it and better suited to a place in a retirement home than the leadership of a political party.

And, amongst other things, they ought to be causing some perturbation in Tory ranks.

Does Mr Cameron have much interest in cutting tax for low and middle earners? There has been little so far to suggest he has. Has the tax radicalism of the Thatcher years been banished from his party? It's a bit strange to see it surfacing amongst the Lib Dems.


If you value what this story gives you, please consider supporting the Eastern Daily Press. Click the link in the orange box above for details.

Become a supporter

This newspaper has been a central part of community life for many years. Our industry faces testing times, which is why we're asking for your support. Every contribution will help us continue to produce local journalism that makes a measurable difference to our community.

Latest from the Eastern Daily Press