Liberal Democrats are pushing the Chancellor to speed up tax cuts for people on ordinary salaries – and fund the reforms by increasing taxes on the rich, according to the chair of the Parliamentary party.
Lorely Burt (Lib Dem Solihull) said her party wanted George Osborne to move more quickly towards increasing the income tax threshold to £10,000, as he prepares to make his Budget statement on March 21.
She also spoke bluntly about Lib Dem demands for reform of the House of Lords, amid reports that Tory MPs are set to oppose the policy, warning that an elected second chamber must be introduced before the next election.
But Ms Burt dismissed reports that the coalition is in crisis as the Lib Dems become increasingly assertive – and Tories increasingly unwilling to accommodate them.
The public negotiations taking place over the Budget are said to have upset many Conservatives. The Liberal Democrats even produced a video on YouTube in which Nick Clegg, the Deputy Prime Minister, urges the Chancellor to “deliver faster tax cuts, funded by increasing the amount paid by the richest”.
The Government has previously announced plans to increase the income tax threshold by £1,000 to £7,475 in the 2010 Budget, and to increase it further to £8,105 this year.
But the Lib Dems want further increases in the threshold, which effectively amounts to a tax cut for most working people, and appear determined to take the credit for them.
Proposals to replace the House of Lords with an elected chamber are also controversial.
Tory backbencher Philip Davies said over the weekend that he would vote against the reforms, while Hereford Conservative MP Jesse Norman has argued that there is no point considering reform until after the Scottish vote on independence has taken place, as breaking up the United Kingdom could “throw our constitutional arrangements into turmoil”.
Ms Burt is the chair of the Parliamentary party in the Commons and joint chair of the party’s business, innovation and skills committee. Speaking to the Birmingham Post, she said Lib Dems were urging Mr Osborne to “go faster” on raising the threshold.
She said: “If you look at how we can help the people who are struggling the most, I think that the faster raising of the threshold would benefit them in quite a lot of ways.
“It increases disposable income for those who are most likely to spend it. They are not going to squirrel it away – they will go down the shops and spend it on the things they need to buy.
“It helps them and it helps the economy.”
But if the policy needed to be paid for then Ministers should look at ways of making the rich pay more taxes.
“In order to balance it we could look at increasing the amount of contribution that is being made by the wealthiest.
“If you look at someone who is earning £30,000 and the proportion of income they pay in tax, and someone earning £300,000 and what they pay, the burden falls disproportionately on the lower income earners.