Nick Clegg in ‘Further and Faster’ Call on Tax ThresholdsSaturday, January 28th, 2012
The Coalition Government announced in the June 2010 Budget that its long-term policy objective was to raise the personal allowance to £10,000 for individuals under the age of 65. The intention was for this to be completed by the end of their five-year term of government.
However, HM Treasury confirmed in the Autumn Statement 2011 that they are not in a position to make a commitment to progress this increase. The Office for Budget Responsibility (OBR) projected an increase to £9,215 in 2016/17.
On 26 January 2012 in a speech to the Resolution Foundation in London, Deputy Prime Minister Nick Clegg said:
‘Today, I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance because, bluntly, the pressure on family finances is reaching boiling point’
Ahead of that speech, in an interview, Mr Clegg said:
‘I cannot tell you what is going to be in the Budget, because it hasn’t been decided yet, but this is very much what I believe should be in it’
Of course, raising the threshold means that more people pay less tax. This results in less revenue, estimated as £9bn. Mr Clegg addressed the issue of how Government may compensate for this loss of revenue, referring to ‘loopholes and allowances and exemptions for people at the top (of the income scale)’. He implied that these would be looked at to giving ‘fairness in the middle’. He further went on to say that tax avoidance will continue to be addressed.
On the basis of these comments, will Budget 2012 on 21 March go against OBR’s projections and accelerate the increases to the Personal Allowance? What tax measures will be taken to take from the ‘top’ to share with the ‘middle’?
- Deputy Prime Minister’s Website – 26 January 2012 Speech