In his speech to kick off the Eastleigh by-election, the Lib Dem leader said his party has created a fairer system than under Labour and that “those with the broadest shoulders should bear the biggest burden”.
He said that when the coalition came to government the tax system was “failing” but half way through, it had “made major progress on every front”.
He defended the significant reduction in corporation tax from 28% to 21%, by making the UK “one of the most competitive corporate tax regimes in the world.”
He pointed to the increase in the personal allowance, which he said would be “£2,965 higher than when we came to office”.
“Over 20m basic rate taxpayers will be – in total – £600 better off: 2.2m of the lowest earners will pay no income tax at all,” he added
He took on the public and political hot topic of multinationals paying tax in the UK by saying, “it’s a sign of the times that people form views about their coffeehouses, search engines and booksellers on the basis of their tax returns.
“Now, more than ever, there is a growing sense within the public debate that how you approach tax says something about who you are.”
Clegg floated the idea of an alternative to the long promoted Lib Dem “mansion tax”, in the form of a higher council tax on properties worth over £2m. “Right now there are properties for sale for tens of millions of pounds around Regents Park. Whoever buys them will pay the same in council tax as a family living in a three-bed semi in Lewisham.”
However, he did concede that “it’s an open secret that our Conservative partners do not share our views on this”.
On the criticism that the move to reduce the top rate of tax to 45p received, he claimed OBR figures showed that government had raised five times as much off the wealth created from the change.
“That comes from capping tax reliefs for very high earners, introducing a higher rate of stamp duty for expensive properties, and cracking down on the avoidance of stamp duty and capital gains tax on residential property.”
ICAEW chief executive Michael Izza said the speech: “demonstrates the importance of tax and where it now sits in the political debate. Delivering a fair tax system with the proper resources to administer it, has to be an important priority in restoring confidence. That requires a sensible, rational and reasoned discussion, all of which is reflected in today’s speech.”