Liberal Democrats publish plans for fairer and greener taxes

12.52.50pm UTC (GMT +0000) Sun 13th Aug 2006

The Liberal Democrat's Tax Commission has unveiled its proposals for a fairer, greener and simpler tax system.

The Commission proposes to:

• Lift two million people on low income out of tax

• Cut the basic tax rate by 2p and take 1.3 million people out of the upper tax rate

• Tackle climate change by taxing pollution

• Cut the number of tax rates and reliefs for both individuals and businesses

Launching the report, Liberal Democrat Shadow Chancellor, Dr Vince Cable MP said:

'These proposals demonstrate our commitment to tackling inequality and environmental damage while maintaining financial discipline.

'The tax changes totalling £18 billion a year are the most progressive policies proposed any party in recent history. This is achieved without raising overall levels of taxation.

'The changes in income tax will make the tax system fairer for those on low and middle incomes. Specifically this will benefit the vast majority of pensioners, key public sector workers and young professionals.

'These tax cuts for the majority will be paid for by the wealthy and those with environmentally damaging lifestyles.'

Current system 'not fair'

Commenting on the current tax system Dr Cable said:

'The current system of taxation is not fair. The bottom 20% of households pay proportionately more of their income in tax than the richest 20%. There has also been a marked increase in wealth inequality since Labour came to power.

'Despite the rhetoric, levels of green taxation under Labour have been falling and these taxes are failing to achieve substantial behaviour change. The Conservatives talk about the environment but aren't willing to make the tough choices necessary.'

Concluding Dr Cable said:

'In parallel with these tax changes we are looking at Government spending to identify low priority spending which we would cut in favour of higher priority spending.

'Our package will radically shift tax and spending priorities while maintaining financial responsibility.'

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The full Tax Commission report is available from the Policy section. The proposals will be voted on at the Liberal Democrat Autumn Conference in September.