THE Liberal Democrats yesterday were embroiled in a row over taxation
which left the impression that their economic policies are in a muddle.
Treasury spokesman Malcolm Bruce launched a budget presentation in
which he said that those at the highest end of the income scale should
expect to contribute more than at present, but would pay a ''realistic''
rate of no more than 50%.
This appeared to contradict a party document, published only last
month which said the highest rate -- for incomes over #100,000 -- would
not exceed 60%.
At a news conference later, Mr Bruce, who was making his debut speech
as Treasury spokesman, denied that the party had been panicked into
pulling back from a 60% tax rate by adverse reaction and the threat of
being portrayed as a high-tax party.
He tried to calm the waters by stating that he had been setting out
his own priorities.
The forward indicators were that it would not be necessary to have
taxes at 60%, and he was anxious to draw attention to other aspects of
the budget package.
Earl Russell, a member of the working group which came up with the
original 60% proposal, said the figure was not sacrosanct, while party
leader
Paddy Ashdown said Mr Bruce had been ''courageous'' in putting forward
his views.
However,Mr Bruce's statement was immediately seized upon by the other
parties.
Labour Treasury spokesman Alistair Darling said: ''The Liberal
Democrat tax plans are in complete disarray. It must rank among the
quickest U-turns in political history.'' Treasury Minister David
Heathcoat-Amory said that the announcement was no more than ''window
dressing'' designed to conceal substantial tax rises for middle-income
earners.
In his budget presentation, Mr Bruce held out the prospect of reducing
tax thresholds to perhaps 10% for the lowest-rate taxpayers.
He presented what he described as a radical rethinking of taxation
policy, aimed at producing a fairer system while at the same time
encouraging business enterprise.
He told the conference: ''There is scope for radical rethinking. Taxes
on lower-
income earners start too soon and at too high a level. I want this
party to address this issue further by lowering the threshold rates of
the lowest tax payers. This would enable us to tackle the proliferation
of allowances, giving realistic allowances for everyone who is actually
paying tax.
Mr Bruce put forward proposals to introduce taxes on pollution to
replace taxes on wealth creation, and said there might be some scope for
what he described as ''earmarking''.
He continued: ''For example, if urban road pricing was introduced,
some revenue could be targeted to urban public transport. But overall
these tax reforms should be offset against each other in our own fully
costed programme.
''It may even help us to cut the tax levels of the lowest income
earners -- perhaps to as low as 10%.''
THE row over how the party should act in the event of a hung
Parliament after the next General Election, continued to rumble on.
Labour's local government spokesman Jack Straw said that there could
be no question of any pact with the Liberal Democrats.
''There is no question that the Liberal Democrats are the scavengers
of British politics. They will do or say anything to secure a bit of
influence,'' he said.
Conservative Party deputy chairman Dame Angela Rumbold said that a
vote for the Liberal Democrats was effectively a vote for Labour.
''It is a deception on the part of the Liberals if they say: 'Vote for
us. We're not the Labour Party.' They are and always traditionally have
been,'' she said.
However, the outgoing president of the Liberal Democrats, Mr Charles
Kennedy, said there was a need to get away from ''this accursed
debate.''
He said: ''In a year's time, I would like us at this conference to be
seen to be understood as an independent, separate party, not obsessed
with other parties, not constantly being quizzed as to where we stand.''
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