Clegg: property taxes should replace the 50p rate

Deputy Prime Minister says 50p rate will be scrapped once low and middle incomes are “breathing more

If George Osborne's hint in last week's Budget wasn't enough, we now know for certain that the 50p tax rate will be scrapped at some point during this parliament. In an interview with the Financial Times, Nick Clegg suggests that the tax will be abolished once those on low and middle incomes are "breathing more easily" and will be replaced with a range of new property taxes.

As Clegg points out, Osborne won't want to scrap the 50p rate until he's certain that he can offer relief elsewhere. Polls show that the tax is relatively popular with voters and Labour would seize any opportunity to portray the Chancellor as a friend of the rich. It's notable that while the progressive 50p rate is "temporary", the regressive VAT increase is "permanent".

Senior Lib Dems, most notably Vince Cable, have long spoken of their desire to divert taxation away from income and towards property. In his recent New Statesman essay on reclaiming Keynes for the coalition, the Business Secretary wrote of the need to shift taxation "away from profitable, productive investment (as opposed to unproductive asset accumulation, as with property)".

Before this, in his speech at last year's Lib Dem conference, Cable also argued for higher taxes on land as well as property (the subject of a recent NScover story by Jason Cowley).

He said:

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property, and land, which cannot run away, [and] represents in Britain an extreme concentration of wealth.

Over the weekend, Cable returned to this theme in several interviews and spoke of the need to "shift from high marginal rates of tax on income which are undesirable, to taxation of wealth, including property". Asked if he was considering a so-called "mansion tax", he said: "I'm sure that's one of the things we're going to have to look at."

Clegg's FT interview is short on detail, although, unlike Cable, he rules out a version of the "mansion tax" proposed by the Lib Dems at the last election and supported by David Miliband during the Labour leadership contest. Instead, he suggests the coalition will "look at the way the council tax system is structured; the way stamp duty is structured".

Another option, as Jason suggested in his piece, would be to introduce capital gains tax on the profits made from the sale of first homes.

On taxation at least, the Lib Dems can now claim to be exerting serious influence on the Tories. Osborne has embraced their plan to raise the personal income-tax allowance to £10,000 by the end of this parliament and is now set to restructure the taxation of top earners along liberal lines.

Labour must hope that the 50p rate raises some significant revenue. If not, the party could be left on the wrong side of the tax debate.

George Eaton is political editor of the New Statesman.

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En français, s'il vous plaît! EU lead negotiator wants to talk Brexit in French

C'est très difficile. 

In November 2015, after the Paris attacks, Theresa May said: "Nous sommes solidaires avec vous, nous sommes tous ensemble." ("We are in solidarity with you, we are all together.")

But now the Prime Minister might have to brush up her French and take it to a much higher level.

Reuters reports the EU's lead Brexit negotiator, Michel Barnier, would like to hold the talks in French, not English (an EU spokeswoman said no official language had been agreed). 

As for the Home office? Aucun commentaire.

But on Twitter, British social media users are finding it all très amusant.

In the UK, foreign language teaching has suffered from years of neglect. The government may regret this now . . .

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.