The third way on tax

The Lib Dems have today proposed changes to the income tax system which will significantly move the onus of payment onto the higher earners.

The scheme effectively replaces their old proposal to cut 4p off the tax rate.Instead the lower threshold rate would be increased to £10,000 resulting in everybody up to earning £100,000 effectively having a £700 a year cut in income tax.

This is of course going to be dismissed in terms of how you can have tax cuts during a recession with a rspidly growing public sector deficit.

The Lib Dems argue that it can be funded quite easily by closing all the loop holes and taxing the wealthy.This would mean cutting pension relief and raising capital gains tax