The Liberal Democrats will unveil a revised version of their property tax later today after fears it could damage the party's election prospects in London and the south of England.
Party leader Nick Clegg will announce that the so-called "mansion tax" will now only apply to homes worth more than £2m, rather than £1m as originally planned. The tax rate on the remaining 70-80,000 properties affected will be increased from 0.5 per cent to 1 per cent.
The plan suffered a chaotic launch at the party's conference in September after senior Lib Dem MPs, including members of the frontbench team, said they had not been consulted about it.
MPs in marginal constituencies also raised fears that the tax would lose the party votes in London and the south of England, where property prices are highest.
Clegg will promise to use the £1.7bn raised by the tax to fund the party's plan to raise the income tax threshold to £10,000.
The Lib Dems say the plan would take around four million low-paid workers and pensioners out of paying income tax and would save most workers around £700.
Ahead of the announcement, he said: "If you want to know how committed a government is to fairness then look at its tax system. Gordon Brown has created a tax regime that forces some of the lowest earners in society to pay hundreds of pounds in tax they can't afford, while polluters and rich tax dodgers avoid paying their fair share.
"Meanwhile the Conservatives want tax cuts for millionaires, but say there might be tax rises for everyone else. Under our plans people won't pay a penny on the first £10,000 they earn. That would put £700 back in the pockets of the vast majority of taxpayers, and take millions of people on low pay out of paying income tax altogether."
The property tax is designed as a temporary measure until the party implements its plan to scrap council tax and replace it with a local income tax.
