Deputy prime minister Nick Clegg says there is “no question” of cutting the top rate of income tax below 45p in this parliament.
In his speech to the Liberal Democrat autumn conference in Brighton today, Clegg said he “conceded” the cut from 50p in the March Budget so he could “insist” upon the raising of the personal allowance to bring more low-earners out of paying tax.
Chancellor George Osborne announced that the cut will take place in April 2013, highlighting a HMRC report showing the increase in the rate from 40p to 50p had only raised one-third of the £3bn forecast.
Clegg said: “Now that we have brought the top rate of tax down to 45p – a level, let’s not forget, that is still higher than throughout Labour’s 13 years in office – there can be no question of reducing it further in this parliament. All future cuts in personal taxation must pass one clear test: do they help people on low and middle incomes get by and get on? It is as simple as that.”
The Lib Dem leader pledged to stick to the Government’s austerity programme and rejected calls from the right to de-regulate and calls from the left to spend more as ways of boosting the economy.
He said: “What is needed – and what we are delivering – is a plan that is tough enough to keep the bond markets off our backs, yet flexible enough to support demand. A plan that allowed us, when the forecast worsened last year, to reject calls for further spending cuts or tax rises and balance the budget over a longer timescale.”
He said because the plan commands the confidence of the markets, it has allowed the Government to launch the Funding for Lending scheme.
Clegg warned that Britain could turn into the economic equivalent of Greece if it does not pay down its debts and deficit.
He said: “In the coming years, some countries will get their own house in order. But some will not. Those that do will continue to write their own budgets, set their own priorities and shape their own futures.
“But those that do not will find their right to self-determination withdrawn by the markets and new rules imposed by their creditors, without warning or clemency.
“That that will never happen to us is often just blithely assumed; the comparisons with Greece, breezily dismissed. Yet it is the decisions we take – as a Government, as a party – that will determine whether we succeed or fail.”