Nick Clegg’s ‘tycoon tax’ plans
Nick Clegg says he wants to introduce a “tycoon tax” to go after top earners who employ an “army of lawyers and accountants” to avoid paying tax.
The deputy prime minister signalled he is ready to remove opposition to axing the 50p top rate of income tax – a move that Tory backbenchers and business leaders have demanded – on condition the wealthiest pay their fair share.
Speaking as the Liberal Democrats meet in Gateshead for their spring conference, Mr Clegg said he believes thousands of millionaires pay tax at a rate of less than 30 per cent.
It comes after prospective US Republican presidential candidate Mitt Romney admitted he was paying just 13.9 per cent tax on his earnings.
Nick Clegg said: “You hope that kind of thing doesn’t go on in this country. So I looked into it. There are hundreds of people earning millions per year who are barely paying 20 per cent tax, forget 40 per cent, forget 50 per cent, forget 30 per cent. They are not even paying 20 per cent. Therefore, I think it’s time that we look at what I call a tycoon tax.
The deputy prime minister told Channel 4 News it is “completely unacceptable”.
“If you’re earning millions per year, if you’re able to pay an army of lawyers and accountants to basically pick and choose what tax you are paying, if you are paying as low as 25, 20 per cent or even less in tax, there should be a minimum fair share that you should pay to society.”
Aides said no minimum rate had been laid out but the “problem” was being discussed ahead of the budget.
Mr Clegg added: “I think the principle of a mansion tax is a perfectly sensible one.
“The overall approach to bearing down on avoidance, closing loopholes, making sure the wealthy pay more of their fair share than less – that is what is more important to me at the end of the day.”
Raising tax threshold
The Lib Dem leader has put pressure on Chancellor George Osborne to accelerate the rate at which the income tax threshold is raised to £10,000 as the part of his drive to ensure the wealthy pay more.
But a report by the respected economic thinktank the Institute for Fiscal Studies (IFS) said better-off families will benefit most from a rise in income tax allowances, questioning claims the policy was progressive.
It said the second-richest tenth of families would gain most in cash terms – and that the top half would do best as a proportion of income.
The IFS concluded that the policy was the most effective way of focusing tax cuts on the lowest pay and would boost incentives to work by taking some out of income tax altogether.
Earlier, Mr Clegg told Liberal Democrats it was time to start championing the policies, including the income tax threshold increase, the party had secured in government.
He told members to “stop looking back” and start “shouting our achievements from the rooftops” at a conference rally.
The party leader said it was time to “move on” from damaging rows over the NHS and tuition fees as he insisted “we are in government and it is a better government for it”.