Liberal Democrat leader's call for faster action on personal tax allowances is broadly in line with coalition policy, No 10 says
Nick Clegg's call for faster action to relieve the pressure on the finances of hard-pressed families has received a neutral response from Downing Street.
The deputy prime minister said in his speech at the Resolution Foundation that he wanted the government to go "further and faster" in raising the personal tax allowance to £10,000. The government is committed to raising it to £10,000 by 2015, and it was assumed it would do it in stages over the next three years.
No 10 said it was coalition policy to raise personal allowances to help lower- and middle-income families. It suggested Clegg's speech was not proposing to go beyond the coalition policy of raising the threshold to £10,000, but was simply calling for the process to be sped up in the next budget.
Other government sources suggested it was not necessarily clear whether the package would represent a stimulus to the economy, but if it did – by putting cash in the hands of those with a propensity to spend – the stimulus would not be large. Broadly, the proposal received a mixed response on the Tory benches, with some concerned that they should not allow Clegg to take ownership of the policy.
In a passage of the speech that was not released in full overnight, Clegg went into further detail of how the tax on the rich could be levied to compensate for the cost of raising the tax thresholds. He said he was not proposing to raise the marginal rate of income tax, but praised the idea of a general tax avoidance rule.
"There are a range of other, specific areas where we need to be tough too, not least stamp duty avoidance, particularly on higher end property sales and the transferring of assets and income abroad to avoid UK tax.
"We need to look at what more can be done to 'green' the tax system. Not just because we care about the planet we leave our children, although that would be reason enough, but because, when the decision is between taxing pollution or taxing hard-graft, the right impulse is obvious."
He said the government needed to be more ambitious about "serious, unearned wealth and the eye-wateringly lucrative assets so often hoarded at the top".
"We still live in a society where, for so many people how much you earn can never compete with how much others own. Our tax system entrenches that divide and we need to be bold enough to shift the burden right up to the top.
"I know the mansion tax is controversial but who honestly believes it is right that an oligarch pays just double the council tax of an average homeowner even if their house is worth 100 times as much?
"And who seriously thinks we would kill aspiration through a levy on the 0.1% of the population who own £2m homes? The mansion tax is right, it makes sense and I will continue to make the case for it. I'm going to stick to my guns."
In practice, Liberal Democrats accept that the proposal will not be accepted in the spring budget.
The Labour leader, Ed Miliband, criticised Clegg's proposals.
"Well, finally, Nick Clegg has woken up to the squeezing of people on middle incomes, but the problem is, who has squeezed the middle? It's this government. This government that has put up VAT, this government that is cutting tax credits and this government that is allowing energy companies to rip people off on their bills, allowing train companies to do the same," Miliband said.
"I don't think people are going to trust Nick Clegg, or this government, to help the squeezed middle."
The proposals also sparked a debate about whether the proposal was redistributive.