The Liberal Democrats (pictured, Danny Alexander) are planning to burnish their credentials as the tax-cutting party for the low paid and pensioners by floating the possibility of cutting national insurance contributions for anyone earning below £12,500 a year.
Commenting, Liberal Democrat city councillor, Darren Fower said:
“This move will also give a tax cut to over 6 million pensioners. This commitment is part of the Liberal Democrat ambition to develop a generational shift to a fairer tax system that rewards work and helps working people.
“By April next year, thanks to Liberal Democrats in government, a tax cut to over 26 million people worth £800 a year to a typical basic-rate taxpayer, will have been delivered and taken over 3 million out of tax altogether!”
- Employees currently start paying national insurance on earnings above £153 a week, or £7,956 a year, at a rate of 12%.
- Lib Dems are working to raise this to £12,500 by the end of the next parliament.
- The Lib Dems are already set to beat the goal set out in their 2010 manifesto to raise the personal income tax allowance to £10,000 in this parliament, by £500 a month before polling day.
- The Institute for Fiscal Studies has estimated that aligning the income tax allowance with employee national insurance contributions would lead to tax cuts for 1.2m employees.