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September 28, 2012 / politicsbitesize

Goodbye mansion tax but hello affluence unit

This year’s Liberal Democrat autumn conference, which ran from 22nd to 26th September, has been somewhat overshadowed by the Deputy Prime Minister. Nick Clegg’s apology for his pre-election pledge not to increase tuition fees was thrust into the limelight when a spoof remix of I’m Sorry spread all over the internet. In a question and answer session at the conference on Sunday he was asked what he would do if the song reached number one in the charts. He managed to sidestep answering by announcing that it was his twelfth wedding anniversary earlier in the week.

Even though Nick Clegg can manage to get his voice splashed all over the internet he can’t seem to get any of his policies listened to by the Prime Minister. For a long time now both the Business Secretary, Vince Cable, and the Deputy Prime Minister have been pushing to impose a mansion tax on properties worth over £2m. However, Mr Clegg admitted at his party’s conference that he had failed to persuade the Conservatives to back the mansion tax scheme.

Yet Danny Alexander, the Chief Secretary to the Treasury, has been more successful in clamping down on the errant super-rich. In September 2011 HMRC and the Treasury set up the ‘affluence unit’ in order to look into the affairs of people in the UK with wealth of over £2.5m. The unit scrutinises the tax affairs of the super-rich with the aim of ensuring that those who should be paying the 50% top rate of tax are doing so.

To date the unit has managed to recoup around £2bn by clamping down on tax avoidance. Danny Alexander told the delegates at the conference in Brighton that the ‘affluence unit’ is expected to double this amount by the end of the year and is projected to increase this figure to £7bn by 2015.

And the good news continues. The HMRC’s scrutiny of the super-rich has revealed that many of the individuals that the affluence unit has examined chose to pay their taxes in the UK and have not run off to the various tax havens around the world. According to the Independent’s tax list, a number of investment gurus, financial experts and insurance CEOs pay their fair share of taxes directly to HMRC rather than rerouting it through some complex offshore account.

At a time when austerity measures are cutting deep into incomes across the country it is heartening to hear that those with deeper pockets are shelling out what is required of them. As Matthew Sinclair of the Taxpayers’ Alliance said: ‘It is important to expose tax evaders, but it is also important to recognise those who buck the trend and pay their fair share of tax. It gives the lie to the notion that all of Britain’s wealthy are scared off by robust tax laws and are engaged in a hide-and-seek battle with HMRC. This is a timely reminder that for all the stories about the bad apples, most people, rich and poor, pay plenty of tax.

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