We wrote this morning about the Tory backlash to Nick Clegg’s speech in which he called for an acceleration of the personal tax allowance – which is currently pencilled in for 2015.
One way to interpret his words was a further attempt by the Lib Dem leader to stamp his brand over the tax giveaway, one of the few pleasant fiscal moves of recent years. (Although how progressive the change is has been the subject of debate.) The Lib Dems have been tacitly authorised to “own” the personal allowance issue – just as the Tories have ownership of scrapping the 50p rate. The difference is that raising the allowance is part of the coalition programme and scrapping the highest income tax rate is not.
But is Clegg being realistic by suggesting that the move could be hastened even further? Nowhere did we hear any mention of the potential extra cost yesterday of accelerating an already expensive (£4bn) plan.
Today there are two figures knocking around – £1.5bn in the FT and £9.5bn in the Times.
Neither is wrong; they are just based on different calculations as to what might happen. (The Treasury estimates that each increase of £100 in the allowances costs just under half a billion pounds).
The Times calculation is based on the tax change happening in full Read more