Welsh Lib Dems unveil £680 tax cut plan

Nation.Cymru staff 

The Welsh Liberal Democrats have backed plans to cut income tax for millions of people, with the party claiming most taxpayers would save around £680 a year.

The plans, unveiled by Liberal Democrat leader Ed Davey at the party’s Autumn Conference in Brighton, would increase the tax-free personal allowance from £12,570 to £15,000, alongside raising the threshold at which employees start paying National Insurance to the same level.

The Liberal Democrats estimate the change would save most taxpayers £680 a year.

The party would also raise the threshold at which the 40p higher rate of income tax begins from £50,270 to £56,000, taking more than 750,000 people out of the higher rate.

The Liberal Democrats argue that years of frozen thresholds have resulted in growing numbers of workers, such as teachers and nurses, being pulled into a tax band originally intended for significantly higher earners.

Under the  proposals, tax thresholds would first be unfrozen and increased with inflation, ending what the party has described as a “stealth tax” caused by fiscal drag.

The larger tax cuts would then be introduced as the economic benefits of closer trade with Europe materialise.

The £17 billion package would be funded through additional economic growth the Liberal Democrats say could be generated by rejoining the European single market and customs union.

Research by economics consultancy Frontier Economics has estimated that deeper UK-EU economic integration could ultimately deliver a £27 billion annual boost to the public finances.

The Liberal Democrats propose using £17 billion of that projected dividend to fund the tax cuts.

The party says the policy builds on the Liberal Democrats’ record in government between 2010 and 2015, when increases in the personal allowance helped take 3.4 million of the lowest earners out of paying income tax altogether and significantly reduced income tax for many other earners.

David Chadwick, Welsh Liberal Democrat Westminster Spokesperson and MP for Brecon, Radnor and Cwm Tawe, said: “People across Wales have spent years watching their bills and taxes rise while their wages struggle to keep up. Our plans would put £680 back into the pockets of most taxpayers.

“That is real money people could use towards their weekly shop, energy bills or simply having a little more breathing room at the end of the month.

“We’ve done this before. In the coalition the Liberal Democrats reduced the tax burden for millions of regular workers, allowing more money to be spent in the wider economy.

“We also need to end the absurd situation where teachers, nurses and other ordinary professionals are increasingly being dragged into the 40p tax rate.

“The way to sustainably cut people’s taxes is to get our economy growing again. Breaking down barriers to trade with our European neighbours would give Welsh businesses new opportunities while allowing us to put the proceeds of growth back into people’s pockets.”

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