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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A man who accused a gay donkey of trying to rape his horse runs for Ukip leader

Another high-quality candidate.

John Rees-Evans, the Ukip candidate for Cardiff South and Penarth in the 2015 general election, is the latest to enter the Ukip leadership contest. And just as your mole thought bigotbait factory Breitbart’s Raheem Kassam was the fruitiest character in the running.

Rees-Evans, a Wales-based Ukipper who used to be in the army, is best-known for a bizarre story he told protesters outside his office in 2014. In which he accused a gay donkey of trying to rape his horse.

Having been asked to respond to a comment by a fellow party member – Julia Gasper – claiming “some homosexuals prefer sex with animals”, Rees-Evans replied:

“Actually, I’ve witnessed that. Yes! I was personally quite amazed. I’ve got a horse and it was there in the field. My horse is a stallion, right. And a donkey came up, which was male, and I’m afraid tried to rape my horse . . .

“So in this case, it’s obviously correct because the homosexual donkey tried to with an animal. But I don’t think that’s what it meant, it’s just a bizarre coincidence.”

Since making his bid for Ukip’s leadership, Rees-Evans has had to take back his controversial claim about the gay donkey on the BBC’s Daily Politics.

He said:

“It was a bit of playful banter with a mischievous activist, OK? . . . I concede it was a mistake to be playful with an activist in the street. The point is I’m not a politician. The guy was just asking me questions in the street. It was an error of judgement. I was very early coming into politics and I’m sorry if I offended anyone by doing that but please can we move on?”


Rees-Evans also made headlines by telling VICE that he persuaded IKEA staff to let him take a gun into a branch of IKEA in Bulgaria last year to protect him in the event of a terrorist siege.

Your mole thinks Nigel Farage is beginning to look like Abraham Lincoln.

I'm a mole, innit.