Labour's Tax Tangle Means Richest Pay Less Tax Than The Poorest - Cable

2.49.34pm UTC (GMT +0000) Wed 10th Dec 2003

Vincent Cable MP speaking in Parliament

The richest 20% of people in Britain pay 34% of their income in taxes, while the poorest 20% pay 42%, Liberal Democrat Shadow Chancellor Vince Cable said today.

Speaking in response to Gordon Brown's pre-budget report statement in the Commons, Mr Cable criticised the Government's hugely over-complicated and unfair tax system. He also questioned the level of Government borrowing, inability to act on record levels of personal debt and ongoing cost of war in Iraq. Dr Cable said: "If the Chancellor is truly concerned about fairness, how can he justify a tax system where the richest 20% of the population pay 34% of their income in tax compared to 42% for the poorest 20%?"

"On today's budget numbers we are looking at red faces at the Treasury and red ink on the books. No matter how the Chancellor spins his figures, the fact is that he is having to borrow more."

"A major contributor to over spending is the war in Iraq. In addition to the billions already spent on the war in Iraq, spending continues at £200 million a month on the occupation. Is it not one of the brutal lessons of the last year for the Government and its Conservative allies that there is no such thing as a free war? British taxpayers will have to foot the bill, and there is no end in sight."

"£200 million is enough to pay for 7,000 secondary school teachers, or to train over 5,000 nurses."

"Finally there is the thorny issue of top-up fees. The Prime Minister has criticised Liberal Democrat proposals to raise money to pay for top-up and tuition fees from those who earn over £100,000 a year. Could the Chancellor explain why he thinks it is too extreme and damaging to the economy to ask Lord Sainsbury, Steven Norris and the Prime Minister to pay a marginal tax rate of 50% of their earnings over £100,000, but right to ask a graduate teacher, on just over £35,000 to pay 50% of their marginal income in tax and top up fees? Doesn't the government recognise the fundamental injustice this would create?"