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Lib Dems to target tax avoiders Lib Dems approve income tax cuts
(about 19 hours later)
The Lib Dems are to outline plans to stop wealthy individuals and large companies profiting hugely from "immoral" tax avoidance. The Liberal Democrats have backed plans to make cuts to income tax for people on low and middling salaries.
Tax-free payoffs to executives who have been dismissed and firms which minimise tax on property deals will be targeted. Party members in Bournemouth approved a policy document promising "big" reductions for struggling families at the next election.
Up to £5bn of money lost annually can be recovered and used to fund tax cuts for the poorest, the party argues. Several MPs opposed the plan, urging leader Nick Clegg to keep spending on key public services as his priority.
The proposals come as Lib Dem members prepare for a crucial debate on tax plans at its conference on Monday. The vote means the Lib Dems are the only one of the three main parties currently offering tax cuts.
'Radical measures' The move, on top of an existing pledge to cut income tax by 4p, is seen by some as a bid to win over Conservative voters.
The party leadership is braced for opposition to its goal to cut taxes for low and middle-income earners via a proposed £20bn of savings in public spending. 'Tighten belts'
Frontbench science spokesman Evan Harris has tabled a amendment to the motion - the major policy statement of the week-long conference - insisting further tax cuts should be considered only as a secondary policy. The Lib Dems have campaigned in recent elections on specific tax-raising pledges and there is opposition to its new goal of cutting taxes for low and middle-income earners.
"Radical" measures to clamp down on tax avoidance, aimed at the wealthiest in society, are being put forward to replace plans to raise income tax for the highest earners dropped since the 2005 election. The leadership proposes to find the money for cutting the overall burden of taxation through £20bn worth of savings in public spending.
Corporate tax avoidance had become a "complex, professional industry" that the government had failed to tackle, Treasury Spokesman Vince Cable said Backing the tax-cutting motion, chief Lib Dem policy adviser Danny Alexander said it was necessary for "government to tighten its belt a little so that low-income families don't have to tighten theirs a lot".
It is immoral for people to avoid paying their share of tax Vince Cable, Lib Dem Treasury spokesman "We will target investment where it is needed," he said.
According to Revenue and Customs figures, the Exchequer loses out on between £10bn and £40bn in income a year from tax avoidance. "But once we have invested in our priorities, we would rather hand back money to struggling families rather than central government. That is the choice."
The Lib Dems are proposing action in six areas, which they say, on "modest" assumptions, could recover £5bn. Science spokesman Evan Harris tabled an amendment to the motion, insisting public services should be the main priority, rather than tax cuts, which was defeated.
The bulk of this money would come from preventing companies reducing their tax liabilities by transferring property assets to offshore vehicles. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYI would be delighted if they could actually implement this. Unfortunately the very wealthy have been avoiding tax for centuriesPaul, Bagshot class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5335&edition=1&ttl=20080915142016">Send us your comments
By making all property sales subject to UK tax, the party believes it could save the economy £1bn. Supporting Mr Harris, housing spokesman Paul Holmes said the party risked becoming a "Trojan horse" for those who wanted to "slash and burn" public spending if it backed the tax-cutting proposals.
New powers will be given to Revenue and Customs to probe so-called "golden goodbye" payoffs to company executives to ensure they are fully taxed, it adds. He said Labour's investment in public services since 1997 had made a difference and the Lib Dems risked become too closely identified with Tory policies from the 1980s if the party adopted the leadership's plans.
This would stop bosses "being rewarded for failure", Mr Cable said. In the past, the party has campaigned for an extra 1p on the basic rate of income tax to pay for a better education system.
'Bungled' At the last general election it called for high earners to pay a 50p rate.
Other proposals would see rates of capital gains tax, levied on the sale of shares and investments, aligned with income and national insurance taxes - a measure that the Lib Dems believe could save up to £2.7bn. Speaking in the debate, Treasury spokesman Vince Cable said the promise of tax cuts was "progressive" and did not mean the party was less committed to tackling inequality.
The government's "bungled" changes to capital gains tax earlier this year had created an "enormous incentive to large-scale tax avoidance", Mr Cable said. "Struggling families are asking can you give us a bit more freedom to spend the money we have earned," he said. "Pensioners are saying can you give us a bit more freedom to spend the money we have saved."
The Lib Dems argue that wealthy foreign businessmen with "non-domicile" status in the UK, enabling them to escape paying tax on their overseas income, should become liable for tax after seven years' residence in the country. At a fringe meeting earlier in the day, former leader Sir Menzies Campbell enthusiastically endorsed the tax plan.
Under plans announced by the government in October, "non-doms" are required to pay a £30,000 flat rate fee in lieu of paying tax on offshore income, a sum Mr Cable described as "chicken feed". Over the last two years, the Conservatives have consistently said they will not propose any "unfunded" tax cuts at the next election, while maintaining an aspiration to cut the overall burden of taxation in the future.
There was no justification for wealthy individuals or companies not to pay their "fair share" of tax, he said.
"It is immoral for people to avoid paying their share of tax," he said. "We want to stop that."
He added: "There is an ethical dimension. It is not just a practical way of raising money."