Politicians Find Hung Parliament Taxing

Policy

Conservative position

Liberal Democrat position

Agreement?

IHT – Raising the IHT threshold to £1m

One of the early flagship tax policies of David Cameron’s Conservatives – very popular with the grassroots

Attacked by Nick Clegg during the campaign as a tax cut for millionaires – left leaning Liberal Democrat MPs have recently ruled out supporting the cut

Unlikely – this policy will probably be pushed to the back of the queue of priorities – may remain as an ‘aspiration’

NIC – Stopping part of the proposed NIC rise next year

Dominated the Conservatives’ first week of campaigning, with a Conservative co-ordinated letter opposing the cut garnering plenty of business support

Vince Cable called the business support for the plan “utterly nauseating” and accused Tories of “barefaced cheek” – but manifesto says they want to reverse the rise when finances allow

Both parties are committed in principle to reversing the rise, and the Conservatives made too much noise about this in the campaign for them to give ground

CT – Cutting Corporation tax (CT) cut

Conservatives would like to see this go down to around 25% – believe it would be self-funding as they’d decrease the asset depreciation allowance

The Liberal Democrats have focused more on closing down CT ‘loopholes’ than on any changes to the rate itself

The rate is likely to be cut to the Conservatives’ preferred rate of 25%, possibly with concessions given to Liberal Democrats on loopholes

VAT – Potential VAT rise

David Cameron has said the Conservatives have “no plans” to raise VAT, but refused to guarantee that

Accused the Conservatives of a “VAT Bombshell” in the campaign, but haven’t ruled out a rise themselves

Could go up to help plug holes in public finances

CTC – Reforming  Child Tax Credits

Looking to remove CTCs for those on high to middle incomes

In the debates, Nick Clegg mocked his ability as a well-paid MP to claim CTCs

A strong area of agreement for both parties and an easy way to save money

Policy

Conservative position

Liberal Democrat position

Will it survive?

Income Tax – Raising the Income Tax personal allowance to £10k

A big tax cut? An aspiration for the Conservatives but they are concerned how it would be funded

Key part of their ‘fair tax’ approach – to be paid for by tax rises elsewhere

The Liberal Democrats plan to cover the cost with their mansion tax and more green taxes – the mansion tax is a no-go with the Conservatives, so this is a non-starter

Introducing a £2m mansion tax

The Conservatives claim that this idea is “unworkable” and poorly planned

Designed to fund tax cuts elsewhere – originally set at £1m but revised upwards shortly after

Not happening – rules out the £10k allowance too

CGT – Equalising the CGT and Income Tax rate

The rates were originally equalised by the Thatcher government in the 1980s but will now be seen as a hindrance to the private sector

Another part of the ‘fair tax’ approach – proceeds would go towards funding the £10k allowance

Conservatives would see this as discouraging for business – another blow to the £10k allowance

Introducing a per-plane green tax on flights

Similar plans were floated by the Conservatives two years ago, although they were met with a frosty reception at the time

Switching current per-passenger green tax to a per-plane one

A green tax would bolster both parties green credentials – the Conservatives have been keen to encourage a switch from air to rail travel

Ending child trust funds

Want to end contributions to child trust funds

Want to end contributions to child trust funds

Accused by Labour of being a ‘coalition of cuts for kids’, the parties agree on this issue – money may be spent on other projects, such as a ‘pupil premium’ for the most disadvantaged school children