LibDem wealth tax proposal criticised

Thu, Aug 30, 2012, 01:00

LONDON – British chancellor George Osborne yesterday warned against driving away the wealthy after deputy prime minister and Liberal Democrat leader Nick Clegg called for a temporary tax on the rich.

Mr Osborne said he had already taken steps to ensure Britain’s highest earners paid more but insisted it was vital to hang on to entrepreneurs who would fuel the economic recovery.

Mr Clegg has called for those of “very considerable” wealth to contribute more to turning around Britain’s financial fortunes.

But the chancellor said: “I am clear that the wealthy should pay more which is why in the recent budget I increased the tax on very expensive property transactions.

“But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.”

Mr Clegg floated plans for a short-term wealth tax in a move that will be widely viewed as an attempt to reach out to Liberal Democrat grassroots ahead of next month’s annual conference as well as sharpening distinctions between the party and its coalition colleagues.

Critics however pointed to Mr Clegg’s decision to back a cut from 50p to 45p on the top rate of tax in the March budget, which benefited the UK’s highest earners.

Conservative MP Bernard Jenkin attacked the wealth tax proposal, saying it could “strangle the goose that lays the golden egg”.

“If the politics of envy made a country rich, we would be a very rich country,” Mr Jenkin told BBC Radio 4. “I think most rich people are contributing far more in tax than other people.”

Raising tax meant driving wealthy people abroad, he said, calling Mr Clegg’s proposal “a pre-conference easy-clap line”.

– (Reuters, Bloomberg)