We store cookies on your device to make sure we give you the best experience on this website. I'm fine with this - Turn cookies off
Switch to an accessible version of this website which is easier to read. (requires cookies)

An income tax cut for the wealthy dressed up as a tax cut for the poor: Response to the Budget by Ming Campbell MP

March 22, 2007 9:38 AM

This is the second time that I have responded to the Chancellor's budget. Gordon Brown is a master at making eye catching spending commitments which then have a severe sting in the tail. This year's budget was no different.

The headline that Gordon Brown wants in tomorrow's papers is his two pence cut in the basic rate of income tax. Yet in his statement he failed to mention that the income tax changes announced in the budget will mean that anyone earning less than around £15,000 will pay more in income tax.

This is an income tax cut for the wealthy dressed up as a tax cut for the poor.

While the Chancellor has taken some of our headline policies, he has got the fundamental point wrong; we need tax cuts for the low and middle income earners now. Gordon Brown did not do enough for the hard working family struggling with rising living costs, the young couple worried about interest rates rises or our public sector workers whose income has been squeezed. I am angry that this Chancellor has failed to show that he is listening to the people of Britain.

He has failed to cut taxes for the low paid, he has failed to create a greener Britain by taxing pollution and he has failed to save billions of pounds by cutting government waste. Instead he is concentrating on his own political succession.

Although we have a reasonably strong economy with stable growth and low unemployment, it is shameful that in Britain today the wealth gap between the rich and poor is greater than it was under Margaret Thatcher.

In fact by introducing loopholes in the capital gains tax regime the Chancellor has allowed the rich to minimise their tax bills. Meanwhile, the lowest earning fifth of UK households still pay a greater proportion of their income in tax than the highest earning fifth.

The Chancellor has ignored the issue of climate change for too long. His proposals on Vehicle Excise Duty are only skin deep. This budget should have been a green budget, with a vision and commitment to tackling climate change. With the proceeds going to cut national income tax for low and middle-income families that need it most.

Taxes have gone up significantly since 1997 and there is no case for raising them further. We need smarter spending. Unfortunately this Chancellor has wasted large sums of public money on unnecessary and unpopular measures.

The war in Iraq has cost us over £5 billion to date; identity cards may cost at least £6 billion and perhaps as much as £18 billion; and we are already committed to £74 billion for the decommissioning of the existing generation of nuclear power stations. The government should not be wasting taxpayers' money in this way.

Personal debt levels which have now reached a total of £1.3 trillion and a decline in the housing market would be devastating for millions of families and for the economy as a whole. The Chancellor has ignored this issue for too long.

As Liberal Democrats campaigning in the forthcoming we should stress that this budget failed to reduce tax for those on low and middle incomes, properly tackle the issue of climate change using green taxation and address rising levels of personal debt.