Worcestershire Voters Urged To Study The Small Print In Tory Tax Propaganda

Written by Paul H Griffiths on Wed 20th Sep 2006

An article recently posted on the website of the Conservative parliamentary candidate for West Worcestershire urges voters to "study the small print in Lib Dem tax plans." If she had followed her own advice, she would perhaps have made fewer mistakes.

Let's begin by summarising the main points of the Liberal Democrats' proposals:

• Scrap the 10p income tax rate, taking two million people out of income tax entirely.

• Reduce the basic 22p rate to 20p.

• Raise the threshold of the 40p rate to £50,000 per year.

• Scrap the council tax, which falls disproportionately on people with low and fixed incomes.

To pay for this we would:

• Introduce a fairer, local income tax (LIT) to raise the same amount of money as the council tax (roughly equivalent to a 4p rate)

• Increase Vehicle Excise Duty (VED) on new cars according to the amount of pollution they emit, with significantly higher rates for the most polluting vehicles

• Tax aircraft flights, not passengers, encouraging the most efficient use of aircraft

• Make changes to capital gains tax to increase taxation on property investment and large shareholdings

• Align the income tax and national insurance rate thresholds, and provide pension contribution tax relief at the basic rate only

Since the Tories have yet to announce any tax plans of their own, it's no surprise that they should try to cover their embarrassment by attacking ours. Alas, their efforts are pretty dismal.

First, the Tories claim that there would be "difficulties" when it comes to determining to which council you should be paying your LIT.

You'd owe LIT to the authority in which your principal residence is located. But you wouldn't pay the council, you'd pay HM Revenue & Customs through PAYE or your self assessment forms. They already know where you live, otherwise they couldn't send you your coding notices or tax forms.

Second, the Tories imply that we intend to introduce a 1% property tax.

We have no such plans. Replacing council tax with LIT will leave the UK without any direct property tax, something that many economists consider undesirable. Accordingly, we have said that we will look at this further. But if any property-based tax is introduced, it will be offset by reductions in other taxes or by raising tax thresholds. The aim would be to achieve a stable mix of taxes to serve the needs of the country. We would not tax for tax's sake.

Third, the Tories claim that people in rural areas will be hard hit by our environmental taxes.

We recognise that there must be balance between green taxes and the needs of some people in rural areas. That's why we will look at discounting VED or varying fuel duty in the most remote locations. But it must also be emphasised that much of the fears are exaggerated. The new VED rates will apply only to new car purchases, and there are plenty of low-emission equivalent vehicles to choose from. If Land Rover decided to build only high-emitting vehicles, they would indeed suffer; but we know that Ford, who own Land Rover, already invest heavily in clean burn engine technology. Land Rover and Ford management are clearly not as stupid and short-sighted as the Tories obviously think they are.