Title: Taxation – The Liberal Party
Headings: The Tax Credit System
Taxation
The Tax Credit System
Taxes and Tax Rates
Inheritance Tax and Universal Inheritance
Other Measures

Content: Taxation – The Liberal Party
Taxation
The Tax Credit System
Taxes and Tax Rates
Inheritance Tax and Universal Inheritance
Other Measures
The Tax Credit System
The Liberal Party has long advocated a change to the Tax Credit System. This system reduces administration and eliminates the “poverty trap” whereby people on low incomes can be worse off if they earn more due to losing means tested benefits. By combining the tax and benefits system it makes both easier to understand and provides a mechanism for a minimum wage, which the Liberal Party supports. The main features of the Tax Credit System are that: everyone is entitled to fixed credits according to their needs (a personal credit, housing credit, and credits for the unemployed, students, the disabled etc.), these credits are not means tested; all income is taxed starting at a very low rate (perhaps 10%); if tax exceeds credits then the individual pays the state, if credits exceed tax then the state pays the individual. Taxes and Tax Rates
The Liberal Party fully supports the principle of progressive taxation whereby those on higher incomes would pay a larger proportion of their income in tax. We believe that National Insurance contributions now function as a form of secondary income tax and distort the distribution of the tax burden.