And the party promised a major crackdown on capital gains tax loopholes if it is successful at the polls next month.
Chancellor Gordon Brown’s CGT taper relief would go as would the exemption on capital gains held at death. But the party would maintain the current exemptions for transfers between spouses and reintroduce indexation and retirement relief.
The Liberal Democrats said the measures would form part of its drive to raise funds for investment in public services. In total the moves could save as much as Pounds 2bn, their manifesto claims.
Other tax pledges included the now-familiar proposal to increase the basic rate of income tax by one penny to pay for investment in education. But Liberal Democrat leader Charles Kennedy also said his party would introduce a new high 50 pence in the pound band for people earning more than Pounds 100,000 a year to pay for extra spending on the National Health Service.
The manifesto also commits the party to cutting the 10p rate to zero while taxpayers would be given the chance to allocate on their P60 their preferred spending destination for the extra income tax by filling in a tear off slip and returning it.
Liberal Democrat leader Charles Kennedy said the party would increase the state pension and abolish tuition fees for students in higher education. He said the manifesto was honest because his party explained how it would pay for its planned investments.
The Conservatives described the manifesto as a ‘fantasy menu’.
‘The Lib Dems have presented a fantasy menu of election pledges which are simply unachievable,’ said shadow foreign secretary Francis Maude.
Support from the ICAEW
The ICAEW has backed calls in the Liberal Democrats manifesto for a annual tax Bill.
A new Bill, separate from the annual Finance Bill, would allow greater consultation on tax matters.
Francesca Lagerberg, senior consultant to the ICAEW Tax Faculty, said: ‘We’ve seen frequently in the past that tax changes enacted in a tight Budget timetable are often ill considered, subject to little or no parliamentary scrutiny, and are pushed through with inadequate time for consultation.
‘We have urged all political parties to consider tax reform before the election to ensure a more democratically accountable approach to the legislation in the future, and we are pleased to see that the Liberal Democrat Party has taken this issue on board.’
Labour mocks Tory tax plans
Meanwhile Labour today outlined more of its business credentials, promising a series of tax measures to boost small hi-tech firms if it wins the UK general election. The chancellor said that in a second term a significant chunk of small company profits, currently taxed at 20p in the pound, would be taxed at 10p.
Trade and Industry secretary Stephen Byers also pledged to fundamentally change the current insolvency laws so that people whose businesses failed through no fault of their own could start up again.
He said: ‘This will ensure that honest failure doesn’t lead to a lifetime stigma, while protecting creditors by imposing tougher penalites on the irresponsible and dishonest.’
Brown said Labour’s whole package amounted to ‘radical new measures’ to boost the enterprise culture.
And Labour poked fun at a shadow cabinet minister for ‘hiding’ after an embarrassing leak which claimed the Tories planned to cut tax by Pounds 20bn by the end of a first Tory term.Brown accused Treasury spokesman Oliver Letwin of going to ground after a story was leaked to a newspaper on Monday breaking with the Conservative’s official line of Pounds 8bn of tax cuts.
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