One of the media’s favourite themes is to promote and foster the notion that the Liberal Democrats have broken all our promises. This is obviously because of the tuition fees saga and despite the fact that 75% of our manifesto is in place. However I am concerned that another of our key promises is on the way out - which will further this perception.
Fairness in taxation is one of our biggest flags. Moving the burden of tax away from the lower and middle incomes and further onto those with the broadest shoulders and ability to pay. During the last campaign, I discovered that the tax policy, of no tax paid on the first £10,000 earned, was very popular.
So it is with complete dismay that I learn that the 50% top rate of tax is under consideration. The media, Boris Johnson and the Tory right wing are all in favour of this notion (obviously) but in my view, not only would this be wrong, but it will be another shot-in-the-foot disaster for us.
In happier times, I would have no problems with reducing all the tax rates – indeed a 50% tax rate in the long term is unsustainable. But presently the public sector are on a three year pay freeze, the public sector are losing jobs and business, prices of fuel, travel and goods are rising faster than we would like, the economy still struggles to grow, and we have yet to do anything about banks.
Is anyone seriously suggesting that now is the time for a tax cut (and hence a pay rise) for the very-wealthy – while the standards of living for most people are being reduced?
If the media are correct, negotiations are going on about a quid pro quo – a mansion tax, for example – and I am aware of the argument that a lower rate might bring in more money and allegedly make London more competitive – but the bottom line is that the media and the Labour party will point at us and say that, despite our promises of shifting the tax burden, we gave more money to the rich while many of the poor are worse off – we were not all in this together after all - and we can’t say no.
Here and elsewhere I have been critical of those former members who have deserted our party at its hour of greatest need – but it does get more difficult every day.
Danny Alexander is right to say that those who want this are living in cloud cuckoo land - and I hope that he sticks to his guns.
If the Conservatives want to cut taxes for the wealthy there are other ways of doing so – for example, the threshold at which the 40% comes in is, in my opinion, too low. And of course we gave way on capital gains tax, a good way for the wealthy to avoid tax.
But we must not give way on the 50% rate while so many are still struggling. We should make a clear signal that it is our intention to scrap the 50% rate, but only when the recovery puts us in a position where we can reduce ALL rates - and we can keep working towards genuine fairness of taxation.
