Lib Dems dilute plans for tax raid on wealthy UK homes

Nick Clegg said on Sunday that the Liberal Democrats had watered down plans for a tax raid on wealthy homeowners, as the party leader challenged his political rivals to "come clean" over their plans to balance the nation's books.

The deputy prime minister, looking to gain an advantage over his rivals before the big parties' manifesto launches this week, set out in detail how the Lib Dems would eradicate the current structural deficit by 2017-18.

Pledging to cut less than the Conservatives and borrow less than Labour, Mr Clegg said his party's economic plan had "a heart as well as a brain" as he announced tax rises for owners of £2m-plus houses, motorists and big business.

"We are going to spread the burden by finishing the job of fixing the economy fairly across society," said Mr Clegg. "It means more cuts but it also means asking the wealthiest to pay their fair share."

However, the Lib Dem leader diluted plans to hit wealthy homeowners with a property levy after concerns that it was hurting the party in its seven Greater London seats, such as Twickenham.

The party originally said it wanted to raise £1.7bn from the levy: it now plans to raise £1bn, with £2m-£2.5m homes facing a £2,000-a-year charge, rising to £9,000 for houses valued between £4m and £5m.

"It is less than originally mooted," he said. "We worked it up and looked at what was reasonable, and this is reasonable and fair and it shouldn't scare the horses."

The Lib Dems want to eradicate the deficit by implementing £15bn of spending cuts and £12bn of tax rises in the first two years of the next parliament.

The Conservatives want to complete the task of eliminating the structural deficit by 2018 through £25bn of spending cuts, while raising £5bn from tax-avoidance measures.

Labour has pledged to eradicate the deficit "as soon as possible", but has not gone into more detail about how it will deliver that pledge.

As Mr Clegg outlined his spending plans, George Osborne, the chancellor, came under fire on Sunday for failing to spell out how the Conservatives would pay for the extra £8bn they have promised for the NHS.

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Although criticising his rivals, Mr Clegg also declined to say where the £12bn of departmental budget cuts would fall.

The Lib Dems also revealed new levies on big business, with plans to raise £2bn through additional restrictions on corporation tax relief, on top of the £1bn annual bank levy already announced.

Mr Clegg said the party would raise £1.2bn in the two years to 2017-18 by extending the loss relief rules, which the coalition applied to banks, to all companies. It also plans to raise £800m limiting the amount of debt interest companies can offset from corporation tax.

The other big hit will fall on motorists, with car tax increasing on average by £25 a year by 2017-18 as the Lib Dems review vehicle excise duty rates to ensure the Treasury continues to receive the money it expects as drivers switch to low-emission cars.

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