Liberal Democrats propose to:

  • Lift two million people on low income out of tax by abolishing the existing 10p rate;
  • Cut the basic tax rate by 2p and take 1.3 million people out of the upper tax rate;
  • Raise the employee National Insurance Contribution threshold, so that it begins to be paid at the same level as income tax, and base it on annual instead of weekly earning;
  • Raise the starting threshold for the 40% upper rate of taxation to £50,000 pa;
  • Replace Council Tax with a local income tax on a tax neutral basis.

    • To tax environmental pollution and resource depletion, and to give bigger incentives to sustainability, Liberal Democrats will make a ‘green tax switch’ by:

  • Replacing Airport Passenger Duty with an Aircraft Tax based on emissions of each aircraft;
  • Steeply graduating vehicle excise duty for new vehicles based on carbon emissions;
  • Reforming the existing climate change levy, indexing it annually and eventually changing it into a simpler carbon tax;
  • Indexing fuel duty to inflation, except in periods of oil price spikes;
  • Phasing in reform of the basis on which business rates are charged in England to Site Value rating.