David Laws, the former chief secretary to the Treasury, is urging a reform of the income tax threshold – claiming higher earners have done too well out of the current system.
In an interview with the BBC’s Newsnight, Laws piled pressure on chancellor George Osborne to raise the income tax threshold to £10,000 in next month’s Budget.
"In the
past, virtually all of the tax relief has gone to the very most affluent
people in society," he said.
"What we’ve been doing as a nation is subsidising the most affluent
people when actually you’d think we’d be subsidising people on lower
incomes.
"We can make changes that take away some of the subsidies that are going
to the top 1 per cent or 5 per cent of the income distribution and get
them to where they’re really needed – those on low and middle incomes."
He added that the move would "bring to an end this period of austerity".
Laws said the Lib Dems would make it viable by halving the higher rate
of tax relief on pension contributions from 40 per cent to 20 per cent.
In addition, he would target taxpayers earning £60,000 – usually considered the top five per cent of earners – by stripping them of higher rate pensions tax.
According to the Daily Mail, the Deputy Prime Minister will tomorrow use a party political broadcast to renew his demands for a £10,000 threshold, saying it would deliver a £700 a year tax cut for many.
He will say: "Pressure on family finances is reaching boiling point and people need help."
Laws was forced to resign from the coalition government last year –
just 17 days after he had been appointed, following revelations that he
had claimed expenses while living with his male partner, James Lundie.
Photo from Wikipedia, courtesy of David Spender.
