Nick Clegg Threatens To Veto Tory Proposals To Scrap 50p Tax Rate

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Deputy Prime Minister Nick Clegg has warned his coalition partners that he is determined to stop the proposed abolition of the 50p tax rate.

Clegg made his comments in an interview with The Independent, published on Saturday.

The threat comes on the eve of the Liberal Democrats’ party conference in Birmingham. Clegg is expected to face heavy criticism during the five-day event.

Despite leading the party to power, the LibDem leader presided over their worst English local election results for 30 years.

George Osborne has made no secret of his desire to abolish the 50p rate on incomes over £150,000 - describing it as a "temporary" measure introduced by the former Labour government.

Clegg, however, remains defiant. He said:

"What I, and any government including LibDems, are interested in is lowering the tax burden on the millions of people on lower and middle incomes – not rushing to make sure the very, very richest pay less tax. It would be utterly incomprehensible for millions of people who work hard, do their best for their families, and play by the rules, if suddenly the priority is to give 300,000 people at the very, very top a tax break.”

He suggested that removing the 50p rate could undermine support for the entire tax system.

"If millions of taxpayers feel they are being overlooked, ignored and passed over, as preference is given to people who need the least amount of help at the moment, you destroy the very fabric of consensus without which a sensible tax system cannot survive.
"It would be utterly incomprehensible for millions of people who work hard, do their best for their families, and play by the rules, if suddenly the priority is to give 300,000 people at the very, very top a tax break. It is not going to happen - certainly not until there is significant progress on giving tax breaks to those on lower and middle incomes."

While his show of muscle-flexing on the eve of the party conference season will doubtless play well with LibDem activists, it will infuriate many Tories who are determined to see an end to the 50p rate.

However, Mr Clegg made clear the LibDems would back abolition in the long run only if it was not raising much revenue and if it was replaced by new taxes on "unearned income". These could include a 1% annual "mansion tax" on homes worth more than £2m, a land tax, and restricting tax relief on pensions to the basic 20p rate.

Mr Clegg also risked further antagonising by Mr Osborne - who has always insisted there was no "Plan B" alternative to his deficit reduction plan - by conceding the Government had adopted a "Plan A-plus" to ensure growth. He said: "For too long people have assumed that, because we are sticking to the fiscal plan, somehow the Government is impotent. It is complete nonsense."

At the conference, Clegg is expected to emphasise the party's achievements in government. However, anger remains among the rank and file, particularly on the issues of NHS reform and incapacity benefits.

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