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Lib Dems would raise taxes to cut deficit

The Liberal Democrats would increase taxes to eliminate the UK’s deficit, according to Deputy Prime Minister Nick Clegg.

In a speech at Bloomberg’s London headquarters today, Clegg said the party will stick to the coalition’s plan to eliminate the structural deficit by 2017/18. But he attacked the Conservatives for relying too heavily on reductions in spending to deliver on the promise.

He said estimates from the Institute for Fiscal Studies suggest without any tax rises around £12bn would need to be cut from welfare spending.

He said: “We’ll finish the job [of eliminating the deficit], of course we will, but we’ll finish it in a way that is fair. So not just through further spending cuts, but also by asking those with the broadest shoulders to make some additional contributions too, including for instance through our banded mansion tax, extending new tax bands to higher value properties.

“The Conservatives have now ruled out asking the very wealthy to pay even a bit more in tax to help the ongoing fiscal effort. Instead they’ve said they’ll take billions more from the welfare budget.”

The speech is part of an effort by the Liberal Democrats to recover from a poor performance in the local and European elections last month and to begin distancing themselves from their coalition partners ahead of next year’s general election.

Clegg said it is “high time to debunk the myth” that the party “lost our soul” by joining the coalition.

He said: “It’s thrown at us day in, day out by an unholy alliance of left and right. From the moment we entered Government – Labour, their supporters in the trade unions, their friends in the press – the Conservatives, their financial backers and their powerful friends in the press have all sought to caricature the Liberal Democrats as a party that has traded in what we believe for a whiff of power.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Michael Keech 9th June 2014 at 4:44 pm

    The only thing Clegg believes in is Clegg.

  2. What a wizzo idea. Who would have thought it? A sure vote winner. Sure to come in 7th in a six horse race.

    The guy must be a masochist. Not only did he take a drubbing at the Euro election, and the by-election – coming last behind an Independent candidate and polling a derisory 1,000 votes. He now wants to court total oblivion.

    To think I voted for them in the Euro election – I must have had a brainstorm!

    What a plonker.

  3. Simon Mansell 9th June 2014 at 5:47 pm

    “We contend that for a nation to try to tax itself into
    prosperity is like a man standing in a bucket and trying
    to lift himself up by the handle.”

    Sir Winston Churchill

  4. The easiest way to cut the deficit £100 billion by 10% is stop Landlords receiving the £10bn per annum tax subsidy on their mortgage interest by offsetting it against rental income. It would also solve the rising house price issue particularly in London and the South East as landlords would put a lot of property back onto the market. The Government could then phase out the “help to buy” scheme once most of the tenants had bought property from their landlords and reduce the deficit further! A lot of landlords might then invest their proceeds in AIM, EIS or VCT to obtain further tax breaks which would help the SME’s which the Banks are not lending to. This would also help to sort out the Banks balance sheets which is long overdue and help the economy further. This what the Liberals and all the other political parties should be advocating and I commend it to them!

  5. It’s as if someone doesn’t realise that a blood sucking fly is also called a ‘Clegg’ around these parts. Raising taxes is not dissimilar…. see:- http://www.bing.com/images/search?q=clegg+horse+fly&FORM=HDRSC2#view=detail&id=AA433D296D87CB24FC6A065F6480EBDC4EF800CC&selectedIndex=14

    Could someone show Mr Clegg the Laffer Curve to see if he might change his mind.

  6. Colin Cloy – I don’t see why or how you could apply that sort of rule to just one part of industry. All businesses offset their loan interest costs against profits, why should landlords be singled out, especially when the interest on those loans is probably their biggest expense?

    What you’re proposing is simply rob Peter to pay Paul or penalise those that have done well to reward those that haven’t.

  7. Mark, BTLs are not a trading business like most others companies and provide nothing to the UK economy only income to landlords. The UK Banks are vastly over committed to the BTL sector and have therefore stopped lending to most SMEs which is not helping economic growth. The vast majority of tenants would be able purchase particularly in the South East if the BTL mortgage market was vastly reduced and the “help to but ” can be phased out. Landlords have had it far to easy over the past 25 years and this has to change in order to help FTBs.

    The UK armed forces (mainly the Army) are being cut by 20,000 personnel in order to save £10 billion a year. I would prefer to keep the Army at its current level and see house prices freeze for a while by removing tax relief on landlords mortgage interest. I also believe the vast amount of UK taxpayers and electorate would also prefer this. Each of the main UK political parties need to wake up to this fact if they wish to do well at the next election as it will reduce immigration dramatically!

  8. Have to agree with you Mark – why should BTL landlords be singled-out and not receive tax relief on the expenses of their investment. This is a core principle which must be preserved or else, where would it stop?

    However, the problem of housing and FTBs generally should be tackled in a better way – as well as the excessive risks borrowers and the banks are taking from this overblown sector. When interest rates start rising and house prices falling, that is when the risks will begin to manifest themselves – when it is too late for the over-committed on either side of the fence. Losses, as expenses exceed incomes, are not offsettable against other income either. Realized gains are subject to CGT as well but I bet that not many property investors have paid much CGT as they haven’t started to realize their gains as they think the rosiness of hyper-inflation in house prices in the South East will continue ad infinitum!

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