Liberal Democrats To Drop Distinctive Tax Policy

by Jason Gorringe, Tax-News.com, London

09 April 2002

The UK Liberal Democrats announced on Monday that they are considering dropping one of the party's most distinctive tax policies - the pledge to add a penny to income tax in order to fund increased spending on education.

The policy was one of the Lib Dems' defining characteristics during Paddy Ashdown's reign as leader. However, writing in the Guardian on Monday, the party's Treasury spokesman, Matthew Taylor has suggested that Chancellor Gordon Brown's increases in spending on health and education, and the tax increases which it is predicted will be contained in his Budget next week, could mean that the historic pledge is now redundant.

'On education, we have argued for a 1p income tax rise to pay for smaller classes and ending tuition fees,' he wrote. 'It may well be that the Chancellor's tax rises will also give him the room to pay for all this in the next parliament...We may no longer need the penny at the general election.'

Speaking to the BBC Radio 4's Today programme, Mr Taylor added that the Liberal Democrats 'have now won this argument', explaining that: 'Labour said the money was not necessary before the election. Now it appears that they accept that we were right all along.'

Writing ahead of the release of the Liberal Democrat shadow budget, Mr Taylor also argued that the National Health Service should be funded by a dedicated tax, similar to national insurance contributions.

'If all NHS funding came from a specific tax...the NHS would not be battling it out with other demands when it comes to the annual spending round,' he explained.

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