STOP FIRMS ABUSING TAX RULES: CLEGG

The Government should impose rules on big business to stop firms abusing the system to avoid tax, Nick Clegg said today.

The Deputy Prime Minister said ordinary people were frustrated by the ability of the wealthy to hire an "army" of accountants to slash their tax liability.

In a new year interview with the BBC Radio 4 Today programme, the Liberal Democrat leader said he could not write George Osborne's 2012 budget for him, but added that he thought an anti-abuse rule was possible.

Mr Clegg said: "I think there are millions of people - and these are people who the Liberal Democrats are in politics for - who pay their taxes, who work hard, who aspire to do the right things for themselves and their families, who are quite rightly angered there is a wealthy elite of large businesses who can pay an army of tax accountants to get out of paying their fair share of tax.

"They basically see paying tax as an optional extra, they pick and choose the taxes you pay. That's why I insisted we write into the coalition agreement, as we did when we started the Government 18 months ago, that we clamp down on tax avoidance, including working up long-standing Liberal Democrat ideas - for instance, to apply a new general anti-avoidance rule.

Tax evasion costs the UK £ms

"There should be a general rule that you can't play the system, you can't abuse the system.

"We have received a report from an expert, Graham Aaronson, who has provided a report to the Treasury, that says what he calls an anti-abuse rule is feasible.

"I very much hope, and I'm not going to write George Osborne's budget, we can make progress on that in the budget. We have got to make sure the tax system is fair."

Mr Clegg highlighted achievements already made by the Liberal Democrats in Government, including the raising of the income tax allowance and the pupil premium in schools.

He said the overall goal was to rebalance the tax system away from taxation on work and earnings towards taxing unearned wealth, but refused to comment specifically about a mansion tax.

He said: "We must constantly explain to people what we are doing in this Government. Look at this debate about irresponsible capitalism, what I call crony capitalism.

"It is the Liberal Democrats who have led the debate on clamping down on bankers' bonuses, and I think we have to be just as tough this year with the bonuses coming up as were last year, if not more so.

"It is the Liberal Democrats who led calls, Vince Cable did last year at our party conference, for a new transparency and accountability on excess in executive pay, where people are being paid too much money when they fail to do well for their companies.

"Our cornerstone commitment is to make the tax system fairer by lifting the point at which you start paying income tax.

"I will continue to advocate a system as a Liberal Democrat where you have a lower burden on work and enterprise and a higher burden of tax on wealth. I think we have a tax system that is unbalanced."

Asked about the sequence of events leading up to Mr Cameron's veto at December's European summit, the Deputy Prime Minister said the prospect of Britain being left in a group of one had not been really discussed.

Mr Clegg told the Today programme: "I don't think anyone planned for the outcome that left Britain in a position of one. The dangers are obvious.

"There was no real planning or discussion about the possibility of Britain being in a corner on its own.

"The dangers are that other countries seek to do things in a way that is not particularly helpful to us as a country and when we have not got a proper influence or a good voice."

Mr Clegg said plans had been made to ensure there was a proper single market and a level playing field for financial services in Europe - but in the event "there appeared to have been no negotiation" on these issues.

The Liberal Democrat leader also said "that is history, that happened" and said the Government was still working with its European partners.

He said: "The important thing is we use our clout, and it is considerable clout, in the heart of Europe ... unless we deal with the lack of competitiveness across the European continent, we will find ourselves as a continent in a state of crisis in 10, 15 or 20 years' time.

"I don't want to get into the twists and turns of what actually happened in the dead of night (during the summit). The outcome was the outcome as I learned after the event.

"Whatever your views on Europe, and I know how imperfect it is, how frustrating it is - this is a club that took 15 years to define what chocolate is.

"I believe in our commitment to Europe because I believe it is good for jobs, but I also believe in reform for Europe. You do that by standing tall and speaking out loud and clear from the heart of Europe.

"You do that in any number of ways, across the coalition Government."

Speaking earlier on the Today programme, Mark Pack, co-editor of the blog Lib Dem Voice, said he believed his party could recover if it continues to win policy successes, such as accelerating towards the £10,000 tax allowance.

He said: "The Budget will be particularly important. We are not going to see a big giveaway Budget.

"But the influence of the Liberal Democrats is an open question.

"There have been more Liberal Democrat policies implemented in the last year than in my lifetime - and yet politically we are not benefiting.

"On the broad strategy, the party is united."


PA 2012