Liberal Democrats Propose 4p Cut In Income Tax

4.15.00pm BST (GMT +0100) Tue 18th Sep 2007

The Liberal Democrat conference today backed radical new tax plans that will drop the basic rate of income tax to its lowest level since 1916. The move to cut the basic rate by four pence in the pound to 16p will benefit millions of people on low and middle incomes.

The plans build on those approved by the party conference last year and form part of the party's proposals to lift the tax burden on low and middle income earners, whilst making the rich and people with environmentally damaging lifestyles pay a fairer share.

The revised proposals are tax neutral and have been independently evaluated by the IFS.

The proposals launched in the document Reducing the Burden: Policies for tax reform include:

· Reaffirming the commitment to abolishing Council Tax, replacing it with a tax based on ability to pay

· Removing tax loop-holes exploited by the super-rich

· Radically simplifying the tax code, removing over 500 pages of unnecessary regulations

· Reforming stamp duty to reduce the amount of tax paid on properties worth less than £500,000

· Reforming Inheritance Tax, with the aim of raising the starting threshold to £500,000

Commenting, Liberal Democrat Shadow Chancellor, Vince Cable MP said:

"Our new proposals will put fairness back at the heart of the tax system.

"By cutting the basic rate of national income tax by four pence in the pound the Liberal Democrats are proposing the lowest basic rate since 1916.

"The unacceptable reality is that in Britain today the poorest pay a higher proportion of their income in tax than the super-rich.

"Under our proposals, tax cuts for the majority will be paid for by the wealthy minority, as well as those with environmentally damaging lifestyles.

"Only the Liberal Democrats have produced a costed plan to create a tax system that is fair, simple and green. I challenge Gordon Brown and David Cameron to back up their rhetoric by endorsing our plans.

"The national tax cuts will be paid for by abolishing the capital gains tax break, which allows the very rich to pay a lower tax rate than the people who clean their offices, as well as only providing tax relief for pensions at the standard rate; and raising taxes on polluters."