Clegg Calls for More Taxes on UK's Rich to Fund Cuts for Poor - BusinessWeek

January 26, 2012, 1:26 AM EST

By Robert Hutton

Jan. 26 (Bloomberg) -- Deputy Prime Minister Nick Clegg will strike an independent course within Britain's coalition government by calling for higher taxes on the rich in order to accelerate a planned tax cut for low- and middle-income workers.

Clegg, who's seeking to create a distinct identity for his Liberal Democrats after nearly two years in government with David Cameron's Conservative Party, will today call on Tory Chancellor of the Exchequer George Osborne to bring forward the date when people can earn 10,000 pounds ($15,600) a year before paying tax. The government is currently committed to doing that by 2015.

Osborne said last year the starting point for tax, which was 6,475 pounds in 2010, will rise to 8,105 pounds from April this year. Clegg's comments mark a break from the usual rule for government ministers of not publicly advocating changes to tax policy, which Osborne will set out in his March 21 Budget.

"I want the coalition to go further and faster in delivering the full 10,000-pound allowance," Clegg will say in a speech in London, according to his office. "This rebalancing will necessitate reform across the tax system so that those who are better off, or who act in ways that damage our environment, pay their fair share."

Clegg will say he's speaking on behalf of "the people whose incomes are too high to qualify for welfare benefits but too low to provide any real financial security," adding that for these workers, "the pressure on family finances is reaching boiling point," with "lower real wages and fewer hours at work."

Clegg's decision to speak out may reflect his party's poor poll ratings since entering a coalition with the Conservatives. A YouGov Plc poll on Jan. 24 gave them 9 percent of the vote, less than half what they received at the May 2010 general election.

"People look to the Liberal Democrats to keep this coalition anchored in the centre ground," the deputy prime minister will say. "They want economic competence, but they want compassion too. It is our job to make sure this government delivers both."

The Treasury estimated in 2010 that its plan to raise the tax threshold by 1,000 pounds in 2011 would cost it around 3.5 billion pounds in lost revenue. Clegg's office gave no indication of how he proposed the cost of accelerated rises in the threshold should be covered, beyond that the money should come from the wealthiest.

--Editors: Eddie Buckle, Leon Mangasarian

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.