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Wealth tax rejected as Cable says inequality debate ‘has moved on’

LibDem conference: Paul McMillan reports from Brighton

The LibDems’ radical tax plans have been passed unamended after convincing speeches from left-wing MPs helped persuade delegates to ditch the symbolic 50p-in-the-pound income tax policy.

The party’s tax commission proposals, including abolishing the starting rate of income tax, cutting all pension tax relief to basic levels and slashing the basic rate of income tax by 2p, were voted through despite worries over a spoiler amendment.

Shadow Health Secretary Steve Webb and Parliamentary party chairman Paul Holmes – both popular among the left of the party – joined Shadow Chancellor Vince Cable and Shadow Treasury Chief Secretary Julia Goldsworthy in opposing the amendment calling for the 50 per cent tax to be retained.

The amendment, tabled by science spokesman Evan Harris, called for a 50 per cent marginal rate on earnings over £150,000 to be added to the tax commission proposals.

Harris argued that the amendment would build on the tax commission’s plans while allowing for the continuation of a symbolic policy popular with the electorate.

But Webb said the tax commission’s proposals were a “radically redistributive package” tackling wealth inequality in a more effective way than previous LibDem policies and highlighted the £4bn savings from cutting higher-rate pension tax relief.

Webb said Harris’s amendment would complicate the proposals and send out the wrong signals that the party was taxing enterprise rather than wealth.

Holmes, describing himself as a “wet, left-wing socialist”, told delegates it was time to move on from the 50p commitment and back the proposals unopposed.

He said: “If this was a lurch to the right, then this suspicious left-winger would be against it.”

The tax commission’s proposals were put to the conference by Cable, who said the Tories and George Bush had given tax-cutting a bad name and asked: “Why should the devil have all the best tunes?”

Cable said the public spending debate had moved on from when the 50p rate was proposed and highlighted left-wing European governments which have had to cut top-rate tax levels to stop driving away wealth creators.

Cable said: “This is the most radical, principled and coherent tax policy ever put forward by a British political party and it has the added advantage of being popular.”

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