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19.09.11

‘Tax the wealthy, to save the poor’ -Lib Dems

Speaking at the Liberal Democrats party conference this weekend, Danny Alexander, Chief Secretary to the Treasury, has pledged to ensure the country’s wealthiest people pay their taxes while raising more lower-paid people out of income tax entirely.

Alexander has announced a crackdown on tax avoidance and evasion, ensuring the wealthiest pay their ‘fair share’ in order to raise an extra £7bn by 2015. He also spoke of plans to raise the income tax threshold to £12,500.

Alexander said: “Fair taxation of the wealthiest is key to our deficit reduction plan. If we are all in this together, those with the broadest shoulders must bear the greatest burden. We must focus relentlessly on those who are struggling. And we need to make sure tax owed is tax paid.”

Over 2,000 tax inspectors in a special unit of Inland Revenue are being recruited to focus their efforts on the 350,000 wealthiest people in the UK, who each earn more than £2.5m a year. This comes amid the debate on the 50p top rate on earnings over £150,000, and whether this should be removed, and if so what measures it can be replaced with to ensure that these people contribute to paying down the deficit.

Alexander said: “Last year, I announced a package of investment to strengthen our fight against tax evasion, as well as tax avoidance. This year, an additional 2,250 HMRC staff will move into new anti-evasion and avoidance jobs.

“In less than a month’s time, a new ‘affluent team’ will be place. This team will look specifically at the next 350,000 wealthiest taxpayers. These are the people who pay or should pay the 50p rate of tax. And my message to the small minority who don’t pay what they owe is simple, I agree with the Chancellor. ‘We will find you and your money’ and you will pay your fair share.

“I promised you we’d collect an extra £7bn a year by the end of the Parliament; and I can tell you we're already on track to raise £2bn this year. This year, the average worker is paying £200 less income tax than last year. Next year, the bill will come down by another £120. By the end of this Parliament, most working people will be paying £700 less income tax a year.”

Alexander also talked about the Liberal Democrats’ aim to raise the income tax threshold to £12,500, so that people earning less than this amount per year will not be taxed on their income at all. Although the idea has broad support among many Conservative MPs, some critics fear that a policy removing people from paying tax could sever the relationship between government and the people.

But Alexander said: “In the next Parliament, I want us to go further; our aspiration should be that someone working full time on the minimum wage should pay no income tax at all. An income tax threshold of £12,500 – think what that would do to work incentives, think what it would mean for basic fairness.”

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