Lib Dems propose 'fairer, greener' tax system

Vince Cable presents the case for a 'fairer' tax system at the Lib Dem conference.

Tuesday, 18, Sep 2007 12:00

Income tax should be cut by four pence and council tax abolished, Liberal Democrats agreed today.

Backing the tax reform policy paper, delegates at conference in Brighton said this could be paid for by ending the tax loopholes exploited by the wealthy and levying 'green taxes' against those with an environmentally damaging lifestyle.

Lib Dems condemned the current tax regime which sees the lowest earners pay a larger proportion of their income on tax than the wealthiest.

Vince Cable, Lib Dem economic affairs spokesman, argued it was time to address the "fundamental injustices".

Mr Cable said: "We are not arguing for higher levels of tax, we are arguing for a system that is fairer and greener."

Reducing the Burden advocated income tax be cut to 16 pence in the pound.

In return, the taper relief for capital gains tax should be abolished and non-domicile status tightened up to end exploitation.

Delegates agreed it was right to use the tax system to target environmentally harmful behaviour, backing policies for an airport tax and higher car tax for drivers of the most polluting vehicles.

After fierce debate, conference delegates backed calls to abolish council tax and replace it was a local income tax.

Mr Cable argued that, in the long-term, it would be desirable to introduce a local tax based on property values. But he disputed claims council tax could form the basis for a progress property tax.

"That tax has to be axed, has to be binned and we start again," he said.

Sir Menzies Campbell has attempted to play down claims the Liberal Democrats want to "hammer the rich".

Mr Cable said 90 per cent of people would be better off under the Lib Dem's tax system, and the wealthy ten per cent who would pay more could reduce their tax bill by switching to a greener lifestyle.

He hit out at the other parties' attempts to reform the tax system, accusing them of producing "cheap and nasty counterfeits" of Lib Dem tax policy.

Gordon Brown had adopted Lib Dem proposals for a tax cut in his last budget and then decided poor people had to pay for it, Mr Cable argued.

The Conservatives had meanwhile wheeled out John Redwood as a "right wing aphrodisiac" promising a wealth of tax cuts. However, George Osborne said the flirtation with the right could not be consummated as the party could not afford Mr Redwood's proposals.

Mr Cable attacked David Cameron's plans for a married tax break as discriminatory, arguing it penalised those who need it most.