With less than three weeks to go before the general election, the Conservatives, Labour and the Liberal Democrat manifestoes have been released, with their main tax proposals being as follows:
The Conservative Party:
Increase the personal allowance to £12,500, and the 40% income tax threshold to £50,000;
Increase the 'effective' inheritance tax threshold for married couples and civil partners to £1m, with a new transferable main residence allowance of £175,000 per person;
Raise £5bn from ‘continuing to tackle tax evasion, and aggressive tax avoidance and tax planning’;
Legislate to keep people working 30 hours on minimum wage out of income tax;
Increase the annual charges paid by non-doms;
Review the implementation of country-by-country reporting and ‘consider the case for making this information publicly available on a multilateral basis’;
Reduce the tax relief on pension contributions for people earning more than £150,000;
Maintain ‘the most competitive business tax regime in the G20, and oppose Labour’s plans to increase corporation tax’;
No increase in VAT or NIC;
Establish the Office of Tax Simplification on a permanent basis and expand its role and capacity.
The Labour Party:
Re-introduce the 50% top rate of income tax for people earning over £150,000, and the 10% starting rate;
End the Conservative’s marriage tax allowance;
No increase in VAT, NIC or basic and higher rates of income tax;
Introduce ‘tougher penalties for those abusing the tax system, end unfair tax breaks used by hedge funds and others, and bear down on disguised employment’;
Make country by country reporting information publicly available, subject to international agreement;
Continue ‘the most competitive rate of corporation tax in the G7’, as well as ‘cut, and then freeze business rates for over 1.5m smaller business properties’;
Introduce a ‘bank bonus tax’ to fund their compulsory jobs guarantee;
Raise £2.5bn a year from the introduction of a ‘mansion tax’ on houses worth over £2m;
Abolish non-dom status.
The Liberal Democrats:
Raise the income tax threshold to £12,500;
Raise up to £1.5bn from a ‘high value property levy’ on homes worth over £2m;
Reform capital gains tax and dividend tax relief, so ‘those with the highest incomes and wealth are making a fair contribution’;
Introduce land value tax to eventually replace business rates;
Raise £14bn from tax rises on corporations and the wealthy, as well as from measures to counter tax avoidance and evasion (including penalties);
Adjust the business tax system ‘away from subsidy of high leverage debt and tackle the bias against equity investment’;
Maintain the banking levy and introduce a ‘time-limited supplementary corporation tax charge on the banking sector to ensure it continues to make a fair contribution to fiscal consolidation’;
‘Invest in’ HMRC staff to help them reduce the tax gap;
Increase charges to non-doms, raising £130m, and ending the ability to inherit non-dom status.
‘We risk rushing towards something like chaos in the taxation of pensions for those on high incomes,’ the IFS said of the Labour and Tory tax proposals. ‘Both Conservative and Labour plans will have substantial incentive and behavioural effects for those with incomes in the £150,000 to £200,000 range – potentially bigger effects than the 45% (or 50% under Labour) income tax rate itself.
‘The two main parties seem to be competing to tie their own hands on the main tax rates, whilst scooping up apparently free money from “the rich”, non-doms and tax avoiders on the other,' the think tank added. 'There is a danger that the tax proposals being put forward through this general election campaign will have a long term malign influence on our tax system and economic welfare.’
With less than three weeks to go before the general election, the Conservatives, Labour and the Liberal Democrat manifestoes have been released, with their main tax proposals being as follows:
The Conservative Party:
Increase the personal allowance to £12,500, and the 40% income tax threshold to £50,000;
Increase the 'effective' inheritance tax threshold for married couples and civil partners to £1m, with a new transferable main residence allowance of £175,000 per person;
Raise £5bn from ‘continuing to tackle tax evasion, and aggressive tax avoidance and tax planning’;
Legislate to keep people working 30 hours on minimum wage out of income tax;
Increase the annual charges paid by non-doms;
Review the implementation of country-by-country reporting and ‘consider the case for making this information publicly available on a multilateral basis’;
Reduce the tax relief on pension contributions for people earning more than £150,000;
Maintain ‘the most competitive business tax regime in the G20, and oppose Labour’s plans to increase corporation tax’;
No increase in VAT or NIC;
Establish the Office of Tax Simplification on a permanent basis and expand its role and capacity.
The Labour Party:
Re-introduce the 50% top rate of income tax for people earning over £150,000, and the 10% starting rate;
End the Conservative’s marriage tax allowance;
No increase in VAT, NIC or basic and higher rates of income tax;
Introduce ‘tougher penalties for those abusing the tax system, end unfair tax breaks used by hedge funds and others, and bear down on disguised employment’;
Make country by country reporting information publicly available, subject to international agreement;
Continue ‘the most competitive rate of corporation tax in the G7’, as well as ‘cut, and then freeze business rates for over 1.5m smaller business properties’;
Introduce a ‘bank bonus tax’ to fund their compulsory jobs guarantee;
Raise £2.5bn a year from the introduction of a ‘mansion tax’ on houses worth over £2m;
Abolish non-dom status.
The Liberal Democrats:
Raise the income tax threshold to £12,500;
Raise up to £1.5bn from a ‘high value property levy’ on homes worth over £2m;
Reform capital gains tax and dividend tax relief, so ‘those with the highest incomes and wealth are making a fair contribution’;
Introduce land value tax to eventually replace business rates;
Raise £14bn from tax rises on corporations and the wealthy, as well as from measures to counter tax avoidance and evasion (including penalties);
Adjust the business tax system ‘away from subsidy of high leverage debt and tackle the bias against equity investment’;
Maintain the banking levy and introduce a ‘time-limited supplementary corporation tax charge on the banking sector to ensure it continues to make a fair contribution to fiscal consolidation’;
‘Invest in’ HMRC staff to help them reduce the tax gap;
Increase charges to non-doms, raising £130m, and ending the ability to inherit non-dom status.
‘We risk rushing towards something like chaos in the taxation of pensions for those on high incomes,’ the IFS said of the Labour and Tory tax proposals. ‘Both Conservative and Labour plans will have substantial incentive and behavioural effects for those with incomes in the £150,000 to £200,000 range – potentially bigger effects than the 45% (or 50% under Labour) income tax rate itself.
‘The two main parties seem to be competing to tie their own hands on the main tax rates, whilst scooping up apparently free money from “the rich”, non-doms and tax avoiders on the other,' the think tank added. 'There is a danger that the tax proposals being put forward through this general election campaign will have a long term malign influence on our tax system and economic welfare.’
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