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LibDems propose raising income tax allowance to £10,000

The Liberal Democrats have proposed to cut income tax bills by raising the personal allowance to £10,000 to boost low and middle income earners.

Speaking today, LibDem leader Nick Clegg says that raising the personal allowance to £10,000 will mean that those on the standard personal allowance will see an increase in their allowance of £3,525 in 2009/10.

It will give a tax cut of £705 to anyone earning over £10,000.

He pledged to close the tax loopholes exploited by the rich and big corporations in a bid to make the tax system fairer for those on lower incomes.

Clegg also said the party is in favour of the Government scrapping higher rate tax relief on pensions – a move that has been widely tipped in this week’s Budget.

He said this would be one of the ways the party would pay for raising the income tax personal allowance.

Taxing capital gains at marginal income tax rates and tackling stamp duty land tax and corporation tax avoidance were others measures they would take.

Clegg said: “It is time to end the unfairness that sees big businesses and the wealthy treating taxes as something to be easily avoided, leaving everybody else to pay out.

“For too long governments have been letting companies stash their money in offshore tax havens while taxpayers are left to foot the bill.

“Over time a tax system has developed that creates loopholes for the wealthy and does nothing for those who really need help.

“People who say there isn’t enough money to make our tax system fair are wrong. Our plans wouldn’t add a penny to the overall tax burden, but they would spread that burden far more fairly.

“Far from making this reform difficult, tight Government finances and a harsh recession make it absolutely vital. It will help millions of low and middle income taxpayers who are most likely to spend money so helping the wider economy.”

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