A brief report on tax debate and announcements at the 2011 Liberal Democrat Conference
For the second year in a row, Danny Alexander, Chief Secretary to the Treasury, used Liberal Democrat conference to make a substantial announcement on tax compliance. Last year it was the announcement of a £900 million fund to tackle evasion and avoidance. This year it was the news that HMRC are to recruit 900 new personnel to focus on the rich. They will be part of a 2,250-strong unit handling new anti-evasion and avoidance work. Alexander said the team would focus on the financial affairs of 350,000 of the best-paid people in the country. There has been some media criticism over the fact that most or all of this unit will be reallocations of existing HMRC staff.
On the bigger picture of tax rates, there was plenty of debate at the conference on the 50p income tax rate and a shift of taxes from income and jobs to wealth and property. Party leader Nick Clegg said that "there is no way" he would allow the Conservatives to unilaterally drop the 50p rate until allowances for the lowest paid were raised further. The party’s deputy leader, Simon Hughes, proposed a “mansion tax” specifically for non-domiciled UK residents.
Business Secretary Vince Cable also argued against tax cuts for the wealthy. In his keynote speech, Cable charged politicians on both left and right with “believ[ing] government is Father Christmas... [and that] if taxes on the wealthy are cut, new revenue will miraculously appear.” “Pull the other one!” was his response. He also defended his proposal for a ‘mansion tax’.
In his leader’s speech, Nick Clegg highlighted the increase in the income tax personal allowance, which is promised to reach £10,000 by the end of the Parliament. This policy topped a conference survey of what Liberal Democrat activists felt was their proudest achievement in government. Building on this, Danny Alexander said that the Lib Dems should fight the next general election on a policy of raising the income tax personal allowance to £12,500.
The Conference passed a paper outlining the strategic direction for the party’s policy development up until the 2015 General Election. The paper proposes to develop the party’s thinking on tax, especially looking at wealth taxes, land taxes, green taxation and localisation of revenue raising. Consequently a new Lib Dem tax policy working group is expected to be set up shortly, leading to a policy paper scheduled to be debated at the autumn 2013 conference.
A consultation session on local government taxation discussed proposals that local authorities be funded through a tax on undeveloped land value (rates set by councils), a hypothecated share of IT/NI receipts (based on both residence and location of employment) and other taxes they would be allowed to impose. This is likely to lead to a policy paper, probably to be debated at the autumn 2012 conference.
The conference approved a motion that allows for a windfall tax on operators of existing nuclear power stations. The proceeds will be used to help consumers, especially those in low-income households, adapt to higher energy prices.
Finally, regeneration minister, Andrew Stunell MP, announced that property owners who leave their homes empty for more than two years could be hit with a tax hike to "nudge" them into bringing the buildings back to use quickly. The government is due to launch a consultation on the empty homes premium, a discretionary measure that would enable town halls to charge extra council tax on properties lying abandoned in an attempt to make better use of local housing stock, shortly.
CIOT External Relations Manager
Monday 26 September 2011
NB. George will be producing short reports from all three of the main UK party conferences