Election bidding leaves tax agenda in the air

Nick Clegg

The triangular negotiations between the Liberal Democrats, the Tories and
Labour left prompted speculation yesterday over what tax policies from the
party’s manifestos might survive then horse trading.

The ACCA said it believed the Tory pledge to raise the inheritance tax
threshold was likely to find itself discarded in any agreement with the Lib Dems
as would Vince Cable’s mansion tax on properties worth more than £2m and his
intention to significantly raise capital gains tax.

However, the Tories might compromise on a rise in the personal allowance for
income tax to £10,000. Stephen Herring, senior tax partner at BDO, believes the
Tories could offer a rise to £7,500.

Observers believe that the Tory intention to cut the rate of corporation tax
to 25%, would also also survive talks.

However, last night Gordon Brown announced his intention to resign from the
leadership of the party in an effort to encourage the Lib Dems to consider a
deal with Labour.

Labour and the Lib Dems are much closer to each other in terms of tax policy,
the Lib Dems being more radical if anything.

Where the two could differ is on public services. Vince Cable has said that
no government department could be shielded from cuts because it was wrong to
assume efficiencies could not be made.

At the heart of Labour policy has been a pledge to protect the National
Health Service.

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