Chancellor fails to resolve fundamental unfairness in our tax system

4.43.00pm GMT Wed 16th Mar 2005

The Chancellor has failed to tackle fundamental unfairness in the current tax system in the Budget. In Britain today the poorest 20% pay more in tax, as a proportion of their income, than the richest 20%. Liberal Democrats are calling for Council Tax to be scrapped and replaced by a fairer Local Income Tax based on ability to pay. Not only will the system proposed by the Lib Dems provide significant savings for pensioners and people on low incomes, but Local Income Tax would also benefit the typical household by over £450 per year.

South Suffolk Lib Dems state that Gordon Brown has not gone anywhere near far enough to help pensioners in the Budget. Councillor Kathy Pollard, the Liberal Democrat Parliamentary Candidate for South Suffolk said, "Gordon Brown still offers a pension that is 25% below the poverty line, and the amount pensioners pay in Council Tax is still not related to their ability to pay. The Chancellor has done nothing to fix pensioner poverty. The one-off £200 rebate from Council Tax for pensioners is merely a small short-term gesture".

Pensioners would gain considerably more from the Liberal Democrat's policies of axing Council Tax and implementing a pension increase of £25 a week, starting with the over 75s. Under the Lib Dem Local Income Tax system, the average pensioner couple would gain £438 per year and 56% of pensioners would pay nothing in Local Income Tax.

Other problems with the Chancellor's Budget:

According to the Halifax, the average first time buyer price in 2004 was £131,000. Therefore although the increase in Stamp Duty threshold to £120,000 will help a few, it will actually do little to help the majority of first time buyers. The Liberal Democrats maintain that Stamp Duty threshold should be lifted to £150,000, as this will benefit considerably more first time buyers.

While the Chancellor speaks of the importance of enterprise and helping first-time house buyers, he has done nothing to address the long-term debts faced by students, which clearly would strongly discourage either of these activities. A top rate tax for the wealthiest 1% of taxpayers on income earned over £100,000 would not only allow us to get rid of student tuition fees, but also allow the Liberal Democrats to introduce free personal care for the elderly across the UK and help reduce local taxes. This is the only tax increase proposed by the Liberal Democrats and we propose no hidden taxes.

The Lib Dems are open and honest about how improvements to health, education, policing and other public services can be achieved. In contrast to our opposition, Liberal Democrat policies have been fully costed.