Take minimum-wage workers out of tax, say LibDems

17 Sep 13
The Liberal Democrats have pledged to further increase the tax-free personal allowance so that no one earning the minimum wage pays any income tax

In a vote on tax policy at the party’s annual conference yesterday, delegates also backed plans to reduce the amount of pension contributions on which tax relief can be claimed from £1.25m to £1m. In a number of votes, a plan to reinstate the 50p tax band was defeated.

The party also committed to introduce a mansion tax, applicable at 1% on the excess value of a residential property above £2m.

Opening the debate on tax yesterday, Chief Secretary to the Treasury Danny Alexander said that, by next April, the tax free allowance will have hit £10,000, taking 2.7 million people out of income tax altogether. The Fairer taxes policy paper called for this to be increased further to the level ‘equivalent to a full time job on the National Minimum Wage, currently around £12,300. It should then be index-linked to further rises, to ensure that no-one earning the minimum wage pays income tax on a standard full-time salary’.

Alexander added that a tighter cap on pension tax relief was needed to address the fact that 58% of the total £35bn spent on relief went to the richest tenth of the population. However, the party voted to retain the existing £40,000 annual tax-free allowance.

Following the passing of the policy paper, Liberal Democrat Treasury spokesman Stephen Williams said that the package of measures would ‘tax wealth rather than hard work’ if implemented.

He added: ‘A mansion tax on properties worth over £2m and personal tax allowance set at the National Minimum Wage will be fairer than raising the top rate of income tax to 50%. 

‘We will have already delivered a £700 annual tax cut to 24.5 million people and taken 2.7 million lowest earners out of paying tax altogether by 2014.’


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