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Last Updated: Tuesday, 18 September 2007, 10:25 GMT 11:25 UK
Lib Dems approve income tax cut
By Justin Parkinson
Political reporter, BBC News, Lib Dem conference

Vince Cable
Mr Cable says his plans will make most families better off
Liberal Democrats have voted to lower the basic rate of income tax by four pence in the pound - to 16p.

The party is also calling for council tax to be abolished and replaced with a local income tax.

The Liberal Democrat conference in Brighton voted to increase "green" taxes, including replacing air passenger tax with a tax on flights.

Mr Cable denies that his plans will "hammer" the rich, but insists most families would be better off.

'Massive inequalities'

He told the conference: "We are not arguing for higher levels of tax but for a system that is fairer and greener."

Prime Minister Gordon Brown, when chancellor, had presided over "massive inequalities of income and wealth", he added.

Mr Cable said: "I don't accept the argument that council tax is the basis for some kind of progressive taxation on property.

"It's a system where, if you have a 30m house, you can pay the same council tax as a pensioner couple living in a bungalow.

"You can live on the opposite side of the road and live in a different borough, paying twice the level of income tax."

Lord Newby, chairman of the Lib Dem policy working group, told the conference that, under the local income tax plans, people earning 250,000 a year would pay three times as much as under council tax.

Those earning 15,000 would pay a third of what they are now charged, he said, adding: "This is fairness Lib Dem-style."

Flights

He said: "The tax system can be made fairer, simpler and greener, and we know how to do it."

Supporters of the tax on flights say it will act as a deterrent to airlines flying near-empty planes, unlike air passenger tax.

Lib Dem delegates voted to raise the threshold at which inheritance tax is payable to 500,000 and to reform "regressive" stamp duty on homes, so that "all those buying properties up to 500,000 in value pay less than at present".

Mr Cable is promising to "simplify" the taxation system, with tax return forms reduced to the size of a "postcard".

On Sunday, Lib Dem leader Sir Menzies Campbell said of Labour's time in power: "The people at the top have done very well. In fact, they've done too well.

"The division between rich and poor has become too great and it's time for it to be redressed."

Sir Menzies said replacing council tax with a local income tax would mean those households earning more than about 70,000 a year paying more.


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