Member Article

Clegg urges swifter move to £10,000 tax allowance

Deputy Prime Minister Nick Clegg this morning urged the coalition government to push for faster in raising the level at which people start start paying income tax to 10,000.

Speaking to BBC Breakfast, Mr Clegg said it was about creating fairness, and that many families desperately needed relief.

In a speech to the Resolution Foundation think tank in London, Mr Clegg will outline why the tax system must change, to encourage ordinary people to drive growth.

Raising the income tax personal allowance to 10,000 formed part of the Lib Dems 2010 election manifesto, and was endorsed by the Coalition Agreement.

In April, the allowance will rise to 8, 105, but Mr Clegg wants the coalition further and faster in delivering the full 10,000.

To allow for the increase, it is expected that Mr Clegg will call for extra taxes on societys richest, noting tax exemptions for the highest earners are unfair.

Alex Henderson, senior manager at PwC in the North East, said: “A 100 increase in the personal allowance is estimated by HMRC to cost at least 0.5bn.

“To raise the tax threshold “further and faster” beyond existing plans would cost 11bn. If this is not paid for out of improved tax receipts from growth or from borrowing, there would need to be significant cuts in reliefs or tax rises else where.

“To illustrate the scale of the measure, if VAT were increased to 22% this would just about meet this gap.

“If new taxes are introduced then the costs of doing so and impact on those affected need to be weighed against the benefits.

“People may also be concerned that the ‘net’ for the tax is widened over time. Income tax itself was originally intended as a temporary measure to pay for the Napoleonic wars.”

This was posted in Bdaily's Members' News section by Tom Keighley .