Lib Dem Tax Package Would Be Good News For People Of Northampton

7.52.50am BST (GMT +0100) Fri 11th Aug 2006

Liberal Democrat Parliamentary spokesperson for Northampton North Andrew Simpson has welcomed plans unveiled today for a fairer, greener and simpler tax system.

He said: "These proposals would mean lower tax bills for most households in Northampton, as well as tackling inequality and environmental damage."

The proposals published today by the Liberal Democrat Tax Commission would -

• Save a typical pensioner couple around £1,600 a year through proposals including scrapping council tax1

• Save a typical double-earning couple around £1,500 a year through measures including a 2p cut in the basic rate of income tax2

• Lift two million people on low income out of tax completely across Britain by reducing the 10p tax rate to zero

• Take 1.3 million people out of the top rate of income tax nationally by raising the threshold to £50,000 p.a.

Andrew said:

"The current system of taxation is not fair. The poorest 20% of households pay a bigger share of their income in tax than the richest 20%. Wealth inequality has actually risen since Labour came to power.

"These Liberal Democrat proposals will make the tax system fairer for those on low and middle incomes. Specifically this will benefit the vast majority of pensioners, key public sector workers and young professionals.

"These tax cuts for the majority will be paid for by the wealthy and those with environmentally damaging lifestyles.

"I look forward to supporting these proposals when they are debated and voted on at the Liberal Democrat Conference in Brighton in September."

ENDS

Footnotes

1 Figure based on a pensioner couple with a combined income of £15,000. See table below for calculations.

2 Figure based on a double-earning couple earning the national median household income of £25,000. See table below for calculations.

Table One: Overall Costings For Specific Policy Commitments

The figures in these tables are given for illustrative purposes based on 2006/07 values. While we propose to implement all of these measures within the lifetime of a Parliament, and some of them early in the Parliament, we recognise that depending on circumstances we would need to phase some of them across more than one budget.

Gross (m)

Reduce 10p tax rate to zero (standard rate threshold raised to £7,185) £4,100

Raise employee NICs earnings threshold to £7,185 £5,100

Cut basic rate of income tax by 2% £6,700

Raise upper rate income tax threshold to £50,000 £5,400

Raise upper earnings limit of employee NICs to £50,000 -£4,200

Cut corporation tax by 1% £1,600

TOTAL COST OF PACKAGE £18,700

Gross (m)

Capital gains tax - scrap taper relief £4,500

Reduce CGT allowance to £1,000 £1,700

Single rate of pension contribution relief £4,300

Additional environmental taxes £8,100

Remove some corporation tax reliefs £1,400

TOTAL REVENUE OF PACKAGE £20,000

CONTINGENCY £1,300

Table Two: Estimated Impacts On Household Types From Income Tax, NI, Council Tax, CGT And Environmental Tax Changes

Impact of changes on households Council tax band Council tax bill Income tax & NI changes LIT charge Gain/loss Gain/loss with average environmental taxes

Pensioner couple, income £15,000 G £2,023 -£82 -£33 £1,908 £1,578

Teacher, £25,000 (single person household) F £1,315 £807 -£804 £1,318 £987

Median household income (double earner), £25,000 D £1,214 £1,114 -£483 £1,845 £1,514

Nurse, £20,000, and police officer, £25,000 E £1,484 £1,514 -£1,383 £1,615 £1,284

Cabinet Minister, £130,000 H £2,428 £1,761 -£5,529 -£1,340 -£1,671

City banker, £250,000 (single earner household), includes CGT* H £2,428 £1,761 -£10,929 -£9,271 -£9,602

Young professionals (double income - £38,000 and £25,000) E £1,484 £1,428 -£2,193 £719 £388

Young professionals (double income - £50,000 each), includes CGT* G £2,023 £3,521 -£3,858 -£844 -£1,175

Four nurses earning £20,000 each F £1,754 £2,827 -£2,316 £2,265 £1,934

• Assume CGT reliefs currently benefit richest 10% of households, £2,531 per household. Assume environmental taxes affect all households - average is £331 per annum. Changes to pension contribution relief not included.

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