IFS deems 50p "modest" and "fair"

12.00.00am UTC (GMT +0000) Sun 17th Sep 2006

The Institute of Fiscal Studies at a fringe meeting organised by the thinktank CentreForum at the Lib Dem party conference today deemed the proposal to add a 50p top rate tax on incomes over £150,000 to the party's tax policy modest and fair.

Robert Chote from the IFS described the proposed 50p top rate tax as 'a relatively modest additional giveaway and takeaway compared to those proposed in the tax motion'.

He recognised the aim of the amendment to make the parties tax policy even fairer saying 'the distributional implications of the package would be the same as under Vince's blueprint, only more so.'

Dr Evan Harris MP who is proposing the amendment said:

"I welcome that the IFS have checked this amendment and recognised that it is in addition to the new plans rather than just calling for a return to the old 2005 manifesto tax plans. The amendment is actively aiming to make the tax package even fairer and better."

END

Notes to Editors:

1) The amendment is to be debated on Tuesday 19th September 2006 at the Liberal Democrat party conference in Brighton.

2) The Amendment that Dr Evan Harris MP is proposing to the party's tax motion which differs from the 50p top rate tax included in the Liberal Democrat 2005 manifesto which targeted those earning over £100,000 rather than over £150,000 and directed the revenue raised to other spending commitments rather than directly benefiting lower rate tax payers:

F28 Fairer, Simpler, Greener (Tax Reform Policy Paper)

Pararagh 2 first line

Delete 'without introducing a 50% tax rate income tax' and substitute

'in relation to income as well as wealth' by:

Add a new paragraph 2c

'Introducing a 50% marginal rate (combining Income Tax and 1% National Insurance Contributions) on earnings over £150,000 per year, and using the revenue to raise the starting threshold for income tax further towards our goal of £10,000 per year and taking 300,000 more people out of tax altogether.'

Paragraph 4a

After the words 'ability to pay' continue the sentence:

'with such local income tax to be capped at an income of £150,000 per year.'