Should tax be about fairness? Of course it should

An enlightening glimpse of the three main parties and tax over the weekend and yesterday. First, Tory A-lister and high profile parliamentary candidate Zac Goldsmith was revealed to have used non-domicile status to protect some of his considerable wealth.  Clearly one law for the rich, one for the rest of us. 

 About the only firm Tory tax pledge is to raise the inheritance tax threshold to £2 million precisely to protect people like Mr Goldsmith.  It's bad enough having all the MPs who have abused the expenses system.  But how can politicians dream of proposing spending cuts, tightening belts and raising charges - all inevitable after the next election whoever wins - if they are using tax avoidance loopholes in a way unimaginable to ordinary constituents? Second, the Fabian Society briefed yesterday's newspapers on its soon to be published and painfully honest study of rising inequality in Britain and how Labour's strategy for tackling poverty had reached the end of the road. Third, Nick Clegg's Liberal Democrats announced costed plans to cut taxes for millions of people by closing tax loopholes and removing tax breaks which disproportionately benefit the wealthiest in our society, by taxing polluting activities, and by introducing a "progressive property levy" (aka the "mansion tax") on the the value above £2 million of any home.

Fairness is a fundamental tenet of Liberalism.  As Nick Clegg has said, “If you want to know how committed a government is to fairness then look at its tax system."  I speak at schools in St Albans of my concern that we live in a country where the bottom ten percent of UK income earners pay more tax as a percentage of income than the top ten percent.  What does that say about us as a society and our values? Under Nick Clegg and Vince Cable's plan nobody rich or poor will pay a penny on the first £10,000 of annual income.  It's the same deal for everyone which seems fair.  It will put £700 back in the pockets of the vast majority of taxpayers, and take millions of people on low pay including those on minimum wage out of paying income tax altogether. The plans represent the most radical, far-reaching tax reform in a generation and embody everything the Liberal Democrats stand for: fairness, protecting the environment, rewarding hard work. It is not about raising the overall tax burden, it's just asking those with the broadest shoulders to bear a fairer share. The so-called mansion tax has attracted the most attention.  Actually the number of homes worth more than £2 million in St Albans constituency is minimal - and the one percent levy is only on the value of properties above the £2 million threshold.  But the people who live in the huge houses worth more than £2 million are the ones with accountants most adept at tax avoidance.  The advantage of taxing bricks and mortar in this way is that it cannot be dodged. For the full story on the Liberal Democrat tax plans, click here.

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