Analysis of the Conservatives’ proposed tax cuts or reversals shows that they will cost over £13.5bn a year in 2011-12 prices – yet just £100m has been specifically identified to fund them.

This leaves a £13.4bn black hole, equivalent to a 3% rise in the standard rate of VAT. This would mean an extra tax of £389 on the average household.

The Liberal Democrats have fully-costed plans to raise the starting threshold for income tax to £10,000 – this would put £700 back in the pockets of the vast majority of people, and lift around 4m of Britain’s lowest earners out of paying tax altogether.

It would be funded by ensuring the very well-off pay their fair share, through measures including:
taxing capital gains as income

a mansion tax on properties worth over £2m

giving tax relief on pensions only at the basic rate

tackling tax avoidance
Commenting, Nick Clegg said:

“Liberal Democrats have costed, in full, our proposals for tax cuts. We can tell you, penny for penny, pound for pound, who pays for them.

“We will not have to raise VAT to deliver our promises. The Conservatives will. Let me repeat that: Our plans do not require a rise in VAT. The Tory plans do.

“Their tax promises on marriage and jobs may sound appealing. But they come with a secret VAT bombshell close behind.

“So if you’re on an ordinary income, you have a choice. If you want your taxes to rise: vote Labour or Conservative. If you want your taxes to fall: choose the Liberal Democrats.”