The Deputy Prime Minister has urged his Coalition colleagues to move “further and faster” in raising the income tax threshold to £10,000 per annum, while introducing extra taxes for the rich to fund the move.
At the last election, the Liberal Democrats pledged to increase the threshold and the Coalition agreed to implement the policy by the time of the next election, which is set for 2015. The threshold was raised by £1,000 to £7,475 in the 2010 Budget and the Government plans to boost it further to £8,105 this year.
But Nick Clegg said in a speech to research and policy organisation, the Resolution Foundation, in London: “Today I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance because the pressure on family finances is reaching boiling point.”
Families had seen their earnings fall into relative decline for a decade compared with those at the top, who had benefited from high salary growth. “That has accelerated since 2008, with lower real wages and fewer hours at work,” Clegg said.
But he also called on the UK’s biggest earners to “pay their fair share” through the introduction of additional taxes to fund cuts for ordinary taxpayers.
Pension delays
“Every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?” Clegg said. “There is now an urgent need to give families more help, an urgent need to rebalance our tax system so it rewards work and encourages ordinary people to drive growth.”
In news elsewhere, Steve Webb, Minister for the Department for Work and Pensions, announced that pensions auto-enrolment would now not be fully phased in until October 2018, two years later than originally planned.
By this date, even small companies will be obliged to contribute to workers’ pensions, while employees will have to make a minimum contribution equivalent to 4% of their salary each year. Prior to this time, many will be exempt and staff will only have to pay 1% of their salary into the fund.
The changes will affect employers with a workforce of less than 250 but, despite rumours, the staging dates for organisations with between 250 and 3,000 staff will not be subject to alterations.
Some 70% of workers are now expected to be enrolled in a workplace pension plan before the next election, with large companies kicking off the process in October this year.
