Ahead of next week’s emergency Conservative-Liberal budget, a new grassroots coalition of socially-minded Liberal Democrats – the Social Liberal Forum – have written to Nick Clegg urging him to honour the party’s manifesto pledge to raise capital gains tax (CGT) in line with income tax.
In an open letter to Deputy PM Clegg and Treasury Chief Secretary Danny Alexander – newly drafted in to replace David Laws – the SLF write that it is “crucial” that the budget “spells out an agenda not only for straitened financial circumstances but for fairness as well”.
While the letter concedes that taxation will “inevitably continue to be an area of tension”, and that the party leadership had to “put to one side” a number of “core Liberal Democrat policies” to form the coalition, it expresses the hope that Clegg et al can agree that the “party must never compromise on the principle of making the tax system fairer”.
In this respect, the SLG raise two main concerns. Firstly, that “the Liberal Democrats’ commitment to raise the personal allowance [for income tax] was always part of a wider, redistributive package”.
The letter’s authors state that this package has been “picked apart by the coalition agreement” so that “as it stands” it will “mainly benefit people on above average incomes”. They go on to ask Clegg: “What will you do to ensure that this does not happen?”
Secondly, the letter states that it is “crucial” that the coalition “sticks to the agreement on harmonising capital gains tax rates with income tax”. Failure to do so “will have severe long term consequences and could bring into question the legitimacy of the coalition itself”.
The letter concludes:
“If the coalition falters at such an early stage … it will look dangerously weak and will only embolden those who are determined to see it collapse.
“We would strongly urge you to not compromise any further on this issue.
“At the very least it must not be contemplated without revisiting the Liberal Democrats’ other manifesto commitments for a mansions tax and restricting tax relief on pensions to the basic rate of income tax.”
To read the letter in full, visit the Social Liberal Forum.
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