Will the coalition keep squeezing the middle?

Nick Clegg hints at further middle-class tax rises to fund income-tax pledge.

At the end of another week that's seen the coalition accused of "squeezing the middle", Nick Clegg attempted to mount a defence of the government's tax plans on the Today programme this morning.

As the Institute for Fiscal Studies noted on Monday, roughly 750,000 people will become higher-rate taxpayers as a result of the coalition's decision to reduce the threshold for the 40 per cent band from £37,401 to £35,001. In response, Clegg rightly pointed out that many will pay a higher rate of tax on a "very, very small proportion of their earnings". But this ignores the fact that they will now also fall victim to George Osborne's child benefit raid.

The plan to abolish the benefit for all higher-rate taxpayers means a loss of £1,055 a year for one-child families and almost £2,500 for those with three children. This move, combined with the VAT increase and cuts to tax credits, will result in a particularly sharp fall in living standards for some.

Clegg was adamant that the coalition would fund its £4.3bn pledge to raise the personal allowance to £10,000 through tax rises elsewhere. "We're not going to borrow," he said. But that prompts the question: tax rises on whom? If the coalition continues to meet the promise by reducing the 40p threshold, it will create another 850,000 higher-rate taxpayers.

But an alternative option was brought to mind by Clegg. He noted that the coalition's tax changes meant that businessmen no longer paid "less tax on their capital gains than their cleaners do on their wages". However, as you'll remember, the original Lib Dem plan to equalise capital gains tax and income-tax rates was blocked by Tory MPs. To my mind, this would be a much fairer way of funding the pledge.

In his recent essay for the NS on reclaiming Keynes, Vince Cable spoke of his desire to shift taxation away from productive investment and towards unproductive assets such as land and property. Increasing capital gains, rather than raising income tax, would be a perfect example of this.

The Tories will be reluctant to make what would be characterised as another "concession" to the Lib Dems but this change would be in their interests, too.

George Eaton is political editor of the New Statesman.

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The campaign to keep Britain in Europe must be based on hope, not fear

Together we can show the world a generous, outward-facing Britain we can all be proud of.

Today the Liberal Democrats launched our national campaign to keep Britain in Europe. With the polls showing the outcome of this referendum is on a knife-edge, our party is determined to play a decisive role in this once in a generation fight. This will not be an easy campaign. But it is one we will relish as the UK's most outward-looking and internationalist party. Together in Europe the UK has delivered peace, created the world’s largest free trade area and given the British people the opportunity to live, work and travel freely across the continent. Now is the time to build on these achievements, not throw them all away.

Already we are hearing fear-mongering from both sides in this heated debate. On the one hand, Ukip and the feuding Leave campaigns have shamelessly seized on the events in Cologne at New Year to claim that British women will be at risk if the UK stays in Europe. On the other, David Cameron claims that the refugees he derides as a "bunch of migrants" in Calais will all descend on the other side of the Channel the minute Britain leaves the EU. The British public deserve better than this. Rather than constant mud-slinging and politicising of the world's biggest humanitarian crisis since the Second World War, we need a frank and honest debate about what is really at stake. Most importantly this should be a positive campaign, one that is fought on hope and not on fear. As we have a seen in Scotland, a referendum won through scare tactics alone risks winning the battle but losing the war.

The voice of business and civil society, from scientists and the police to environmental charities, have a crucial role to play in explaining how being in the EU benefits the British economy and enhances people's everyday lives. All those who believe in Britain's EU membership must not be afraid to speak out and make the positive case why being in Europe makes us more prosperous, stable and secure. Because at its heart this debate is not just about facts and figures, it is about what kind of country we want to be.

The Leave campaigns cannot agree what they believe in. Some want the UK to be an offshore, deregulated tax haven, others advocate a protectionist, mean-hearted country that shuts it doors to the world. As with so many populist movements, from Putin to Trump, they are defined not by what they are for but what they are against. Their failure to come up with a credible vision for our country's future is not patriotic, it is irresponsible.

This leaves the field open to put forward a united vision of Britain's place in Europe and the world. Liberal Democrats are clear what we believe in: an open, inclusive and tolerant nation that stands tall in the world and doesn't hide from it. We are not uncritical of the EU's institutions. Indeed as Liberals, we fiercely believe that power must be devolved to the lowest possible level, empowering communities and individuals wherever possible to make decisions for themselves. But we recognise that staying in Europe is the best way to find the solutions to the problems that don't stop at borders, rather than leaving them to our children and grandchildren. We believe Britain must put itself at the heart of our continent's future and shape a more effective and more accountable Europe, focused on responding to major global challenges we face.

Together in Europe we can build a strong and prosperous future, from pioneering research into life-saving new medicines to tackling climate change and fighting international crime. Together we can provide hope for the desperate and spread the peace we now take for granted to the rest of the world. And together we can show the world a generous, outward-facing Britain we can all be proud of. So if you agree then join the Liberal Democrat campaign today, to remain in together, and to stand up for the type of Britain you think we should be.