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Last Updated: Monday, 28 February, 2005, 16:07 GMT
Lib Dems unveil stamp duty change
Sale signs
The Lib Dems want to encourage people to enter the housing market
The Lib Dems have unveiled their plans for the economy, pledging to raise the stamp duty threshold and increase tax for people earning more than 100,000.

The plans, in the party's "alternative budget", also include replacing council tax with a local income tax.

They say raising the stamp duty threshold from 60,000 to 150,000 would help first-time buyers.

But both Labour and the Tories said the Lib Dems would struggle to find money to finance the 500m plan.

Chancellor Gordon Brown is due to unveil his final Budget before the general election in a statement to MPs on 16 March.

First-time buyers are being squeezed out of the housing market
Vince Cable
Lib Dem Treasury spokesman
Lib Dem leader Charles Kennedy insisted: "We have a reputation for being straightforward on tax.

"The difference between the parties on tax take is minimal - the real issue will be one of principle and of priority.

"In principle it is important that the tax burden does not fall disproportionately on the poor and vulnerable."

The Liberal Democrat stamp duty proposal forms part of a wider policy to encourage first-time buyers and those on lower incomes into the housing market.

Under the proposals, the average saving for a new buyer would be more than 1,000, said Lib Dem Treasury spokesman Vince Cable.

"First-time buyers are being squeezed out of the housing market not only by higher house prices but also by being swept into the stamp duty net," he said.

Top-rate tax changes

Other proposals include a new 50% tax rate on earnings over 100,000 which the Lib Dems say will pay for three pledges - getting rid of tuition and top-up fees, free personal care for the elderly and "cutting" local taxes.

First-time buyers are likely to be courted by all the main parties in the run-up to the general election, predicted to be called for 5 May.

A recent survey suggested they could not afford a home in 92% of UK towns.

The Lib Dems' sums don't add up
Paul Boateng
Chief Secretary to Treasury

The Conservatives are also considering cuts to inheritance tax and stamp duty, but will put their plans forward after Mr Brown delivers his budget next month.

They say the Lib Dem proposals will leave a "black hole" that they would have to fill with tax rises.

Shadow Chancellor Oliver Letwin said: "The Lib Dem plans are nothing more than a recipe for clobbering millions of ordinary people, and for doing untold damage to the British economy."

Treasury Chief Secretary Paul Boateng meanwhile argued that Lib Dem sums failed to add up.

"They can have no credibility until they can say how they would fund their ever growing list of tax and spending commitments."

But Mr Cable dismissed criticism of his party's financial calculations and said the Lib Dems merely wanted to shift more of the tax burden to higher earners.

The 50% income tax band would raise about 5.4bn a year, but would be capped to ensure it did not undermine incentives to earning higher salaries, he said.

Mr Cable told BBC News his proposals to abolish tuition fees for students and charges paid by the elderly were "carefully costed".

"The big idea is trying to make the system fairer."




BBC NEWS: VIDEO AND AUDIO
How the Lib Dems plan to overhaul house buying




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