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PMQs: Clegg calls for “big, permanent and fair” tax cuts

November 12, 2008 3:41 PM
Originally published by UK Liberal Democrats

Liberal Democrat leader Nick Clegg reiterated calls for immediate tax cuts at Prime Minister's Questions yesterday. He criticised government tax increases that are disproportionately penalising Britain's poorest and urged the Prime Minister to clamp down on tax breaks for the rich.

Mr. Nick Clegg (Sheffield, Hallam) (LD): Week after week, I have called on the Prime Minister to cut taxes to give help to people on low and middle incomes, and he is now raising expectations that he will do just that, but why should anyone believe him? This is the Prime Minister who will not take responsibility for people losing their jobs, but did take credit for a bank rescue plan that he copied. This is the man who doubled the tax rate for 5 million of the poorest people in the country, and called it a tax cut. When it comes to taxes, he may pretend that he is Robin Hood, but he is no more than a petty pick-pocket. People do not need more cynical tinkering. What people need are tax cuts that are big, permanent and fair.

The Prime Minister: If we had listened to the Liberal party's advice, we would be cutting public expenditure by £20 billion this year. That is not the policy that I believe it is right to follow. I hope that, on reflection, the right hon. Gentleman will support not only the recapitalisation of the banks, but the fiscal and monetary stimulus that ought to be co-ordinated worldwide, and ought not to be happening just in one single country. It

is the ability of countries to work together and to co-ordinate that work worldwide that I think will be important to recovery in every country.

Mr. Clegg: The Prime Minister can misrepresent me all he likes, but he needs to get on and represent the millions of British families who are suffering under his unfair tax system. Right now, millionaires pay less than half the tax that they should on their capital gains. Top earners get an £8 billion tax bonus on their pensions. Up to £40 billion is lost in tax avoidance every year. When will he put an end to these tax breaks, and give ordinary people big tax cuts that are simple, immediate, permanent and fair?

The Prime Minister: First, we have raised capital gains tax from 10 per cent to 18 per cent. Secondly, we have closed tax loopholes and continue to do so in every Budget. Where they are found, we take action when it is necessary. Thirdly, I come back to the point: what sort of stimulus to the economy would it be to cut £20 billion of public spending at the moment?

NB. As has been pointed out by the independent FactCheck website operated by Channel 4, Gordon Brown misrepresented Liberal Democrat policy in his answer. The Lib Dems are not proposing a cut of £20 billion in government spending. The party are proposing to redirect £20 billion a year of government spending that is currently being wasted or used for projects we don't think are necessary (like ID cards), and put it into our priorities. These priorities include guaranteed care for the elderly and extra investment in the poorest children's education (pupil premium). And if there's money to spare, we will channel it into extending our tax cuts for people on low and middle incomes.

Click here to read Prime Minister's Question in full