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March 21, 2012 4:17 pm
Liberal Democrats are celebrating a Budget they feel has given them one of their longest-held ambitions: a significant rise in the income tax threshold. But the backlash against the freeze in the threshold for pensioners caught many by surprise.
The party was largely delighted by a package of measures that contained not only the rise in the personal allowance but also a higher level of stamp duty for people buying properties over £2m.
Nick Clegg, the party leader and deputy prime minister, said: “This is a Budget every liberal can be proud of.
“We have delivered from the front page of our manifesto to the pay-packets of millions of ordinary working people.”
Danny Alexander, Lib Dem Treasury chief secretary, said it was “a Budget for the millions, not millionaires”.
He tried to add Lib Dem wording to the measures announced by his Conservative colleague, branding the £50,000 limit on tax reliefs a “tycoon tax” and the new 7 per cent rate of stamp duty on houses worth more than £2m a “mansion tax”.
Tim Farron, the Lib Dem president, went even further, telling Sky the Budget was “probably the most redistributive in recent memory”. He defended cutting the 50p rate, saying: “I think the 50p rate is an important symbol of the rich paying more; but it’s important that taxes are more than just symbolic.
There was some concern over the so-called “granny tax” however. “It looked sneaky,” one senior Lib Dem said. “The fair way to raise money from pensioners is to make the winter fuel allowance taxable.” Another admitted: “We didn’t expect this level of reaction.”
There was also scepticism from CentreForum, the Lib Dem aligned think-tank, over the new top rate of stamp duty, which it warned should not be seen as a mansion tax. Chris Nicholson, the chief executive, said: “[This] is a poor short term fix. It isn’t a wealth tax, since it only applies at most once, and taxes on transactions are generally bad ideas.”
But the overall package looked to have largely pleased the party’s MPs. Andrew George, Lib Dem MP for St Ives, who has proved a thorn in his party’s side on issues such as tuition fees and the NHS bill, said it was the best his party could have hoped for.
He admitted his party would not have cut the 50p rate if it was in power on its own, but added: “This is a good coalition Budget: it is probably the best we could have hoped for in terms of pursuing the social justice agenda.”
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