Yesterday was pay day for millions of people across Britain, which means they will receive their first pay slip since the Income Tax personal allowance was raised from £8,105 to £9,440. When Liberal Democrats joined government in 2010 this allowance was a mere £6,475.
Raising the tax-free allowance is the Liberal Democrats’ flagship policy and has so far seen Income Tax bills slashed by £600 a year for millions of low and middle income workers compared to what they were paying under Labour. As a result, more than 2 million people on low pay have been lifted out of paying Income Tax altogether.
The tax-free allowance will rise again next year to £10,000, fulfilling a commitment from the front page of the Liberal Democrats’ 2010 General Election manifesto and resulting in a total tax cut of £700.
Liberal Democrat Member of Parliament for Southport, John Pugh, said:
“If you get paid today, take a moment to compare your pay slip to last month’s. You’ll see that Liberal Democrats have cut your taxes.
“From this month, the Liberal Democrats will have lifted 9,440 people in and around Southport out of Income Tax and given a tax cut of £600 to more than 86,700 people.
“It has taken the Liberal Democrats being in Government to deliver the largest programme of tax cuts for working people for a generation.
“The Liberal Democrats are the only party that will radically cut taxes for people on low and middle incomes to build a stronger economy and a fairer society so that everyone can get on in life.”
By April 2014, the Lib Dems will have taken 2.7 million low-income workers out of paying tax altogether, the majority of whom will be women. The £700 tax cut means, for the average family, Lib Dems have cut the Income Tax bill by a third. That is enough for a working couple to pay their council tax or combined gas and electricity bills for a year.
Beyond this unprecedented rise in the Personal Allowance, Liberal Democrats want to increase the tax-free allowance further until no one pays any Income Tax until they earn more than the National Minimum Wage.
Dr Pugh also drew attention to Labour’s record of unfair taxes:
Labour cut tax for millionaires every single year until their last month in government, while increasing tax on low earners by scrapping the 10p tax rate.
Under Labour, someone on the Minimum Wage paid £1,000 in Income Tax. Lib Dems have cut these people's tax bill by more than half and under our future plans, they would pay nothing.
For all but one month of Labour’s 13 years in power the top rate of tax was 40p. Top earners are paying more in tax every year under the Coalition Government.
Labour helped the richest in society when they cut Capital Gains Tax for hedge fund managers and cut tax on millionaires’ pension pots.