Deputy Prime Minister Nick Clegg says he will increase capital gains tax to 35 per cent and lower the tax-free allowance to £2,500 if the Liberal Democrats are part of the next Government.
The Guardian reports that Clegg, speaking at the Liberal Democrat conference in Glasgow yesterday, said a further crackdown on tax avoidance and the CGT increase would fund a rise in the income tax personal allowance to £11,000 by April 2016.
Capital gains tax is currently levied at 28 per cent after rising from 18 per cent in 2010. Clegg wants to raise £500m by increasing it to 35 per cent.
Clegg also wants to cut back on the amount of capital gains individuals can take tax-free by lowering the annual allowance from £10,900 to about £2,500, raising another £250m a year.
The party believes it can bring in a further £750m from cracking down on tax evasion.
The personal allowance is currently £10,000, rising to £10,500 next April and both the Conservatives and Lib Dems want it to increase to £12,500 by 2020.
Last week, Chancellor George Osborne outlined plans to freeze most working-age benefits for two years, saving £3bn as Prime Minister David Cameron promised £7bn of income tax cuts.
Clegg said: “It’s easy to promise a tax cut, it’s much more difficult, especially in the current economic situation to say who pays.
“We are clear that we will pay for this tax cut for millions of working people by asking wealthier people to contribute more. This is about priorities. The Conservatives may have copied our flagship policy but they would pay for it in a deeply unfair way – by hitting the working poor. And the Conservatives want to cut taxes for the better off by nearly five times as much.
“The difference between the Liberal Democrats and the Conservatives is that we want to cut taxes for working people, paid for by the wealthiest; they want to cut taxes for the wealthiest, paid for by the working poor.”