NICK Clegg yesterday said his party would seek to lift all minimum wage workers out of income tax if his party remains in power after the 2015 general election.
The Liberal Democrat leader refused to set out guaranteed policy pledges at this stage but insisted “tax fairness” would be a key matter during negotiations in the event of a hung parliament.
“We are committed as a party – and I am committed to this – to raising the allowance further such that everybody on the minimum wage pays no income tax,” he told the BBC’s Andrew Marr Show yesterday morning.
The party has already trumpeted its role in raising the personal tax allowance – the amount an individual can earn without paying any income tax – from £6,475 to £10,000, boosting most full time worker's incomes by around £700. The policy was one of the major elements of the government’s coalition agreement.
But to lift every full-time worker on the minimum wage out of income tax would require the limit to be lifted to around £11,400, depriving the exchequer of billions in revenue.
Senior Lib Dems such as David Laws have recently suggested that future reductions in income tax could be made up for by increasing so-called wealth taxes, such as the proposed annual “mansion tax” charge on properties worth more than £2m.