West Berkshire Liberal Democrats

Lib Dems talk tax

Liberal Democrats from across the region met in Newbury this week to discuss the national party's tax proposals, to be published on Friday.

The new Lib Dem tax policy will focus on pollution and resource use rather than earnings and income. Around two million low paid workers and a million pensioners would no longer pay income tax and the rest of the working population would see the basic rate reduced by 2p in the pound. Low income workers would also pay no National Insurance, while small businesses would pay much less in rates.

Lib Dems propose to fund these dynamic proposals by a number of measures including higher fuel duties on large, polluting cars and a new emissions-based Aircraft Tax.

Two issues provoked lively discussion at the Newbury meeting, according to land policy researcher and West Berks councillor Tony Vickers who served on the Tax Commission. These were the end of the traditional Lib Dem policy of 50p income tax rate for top earners and the removal of any domestic property tax.

"The new proposals will protect low income households as well as the environment," said Councillor Vickers. "We'd rather tax property owned by wealthy people than their earnings. Wealth creation is good and we don't believe in taxing enterprise."

Lib Dems from all over the country will gather to talk tax again at Party Conference in September. In the long run a national 'land value tax' would help stabilise the housing market. West Berks Lib Dems hope these ideas will help make housing more affordable and allow young people to buy their first home in or around Newbury.

"In the past forty years, the value of land as a proportion of the cost of a new home has risen from 13% to 60%," points out Councillor Vickers. "Whilst older homeowners have become 'land bankers' and may feel rich, to younger house-hunters in pricey West Berkshire, this is a massive and unfair barrier to home ownership. If we scrap the unfair Council Tax without at the same time introducing a domestic property tax at national level we will make matters worse for the young."

ENDS

Note to Editors:

1. Further work will be done on the 'land value tax' (LVT) proposals to develop a long term policy. A West Berks Council members' Task Group on Affordable Housing last year, chaired by Cllr Vickers, recommended that councils in the region lobby for research by Government into how such policies could be implemented in the UK.

2. The full text of the Lib Dem Conference Motion follows.

FP12 Tax Reform

Conference believes that the UK tax system should be reformed to make it:

i) Fairer, in relation both to income and wealth.

ii) Simpler, for individuals and companies, with fewer rates and reliefs and more transparency

iii) Greener, taxing environmental pollution and resource usage, and giving incentives to sustainability.

iv) More local, giving greater freedom for democratic local government to raise and spend revenue.

v) More efficient, giving incentives to work and save and for better resource allocation, and recognising the competitive realities of the world economy.

Conference endorses policy paper 75 Fairer, Simpler, Greener as a statement of the party's policies for revenue-neutral reform of taxation based on these principles. Conference in particular welcomes:

1. The specific proposals for the national budget in a new Parliament to make the direct taxation system fairer and simpler by:

a) Abolishing the existing 10p starting rate of income tax taking more than two million people out of tax altogether and removing one rate of tax.

b) Raising the employee NICs threshold so that NICs begin to be paid at the same level of income as income tax, simplifying the system, and seeking to make employee NICs payable on an annual rather than weekly earnings.

c) Raising the starting threshold for the 40% higher rate of taxation to £50,000 pa - taking 1.3 million people out of paying higher rate tax

d) Cutting the basic rate of national income tax by 2p, as part of a shift from central to local taxation.

2. Proposals to help fund these changes and make the tax system fairer without introducing a 50% rate of income tax by:

a) Reforming and simplifying Capital Gains Tax, in particular by removing taper relief.

b) Providing pension contribution tax relief at the basic rate of income tax only.

3. Proposals to tax environmental pollution and resource usage and help fund our other reforms through a 'green tax switch' by:

a) Replacing the existing Airport Passenger Duty with an Aircraft Tax based on the emissions of each aircraft.

b) More steeply graduating vehicle excise duty for new vehicles based on carbon emissions.

c) Reforming the existing climate change levy, indexing it annually and eventually changing it into a simpler carbon tax.

d) Indexing fuel duty to inflation except in periods of oil price spikes.

e) Phasing in reform of the basis on which business rates are charged to Site Value Rating.

4. Proposals to make local taxation fairer and increase local accountability by:

a) Abolishing Council Tax and replacing it with a fairer local tax based on ability to pay.

b) Returning the business rate to local control.

5. Proposals to simplify the tax system for businesses, including by creating a simpler Corporation Tax structure, removing complex reliefs and cutting the Corporation Tax rate, and introducing rates relief for small businesses.

6. Proposals to simplify and make fairer the taxation of personal wealth and property transactions by:

a) Reforming Inheritance Tax so that it falls on 'accessions', thresholds are raised and exemptions for lifetime gifts reduced.

b) Reforming Stamp Duty Land Tax into a progressive tax that only charges higher rates of duty on the proportion of the property value above a threshold.

7. The long-term ambitions to:

a) Raise the income tax threshold further - with an intermediate objective to raise the threshold to £10,000, the annual equivalent of the National Minimum Wage for a full-time worker.

b) Enlarge the tax base, tax unearned economic rent and stabilise the property market by further developing policies on land value taxation.

c) Overhaul the system of taxing transport and congestion to reflect the potential of road user pricing.

Conference calls for further proposals for land taxation to be developed, including consideration of the Lyons Review report when it is published.

Conference further notes that a Policy Paper on Tackling Inequality and Poverty and Promoting Opportunity covering the issue of poverty and the role of benefits and tax credits will be debated at the September 2007 Party Conference.