Election 2010 Coalition Government : Taxation

The Government believes that the tax system needs to be reformed to make it more competitive, simpler, greener and fairer. We need to take action to ensure that the tax framework better reflects the values of this Government.

* We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in the personal allowance from April 2011, with the benefits focused on those with lower and middle incomes. This will be funded with the money that would have been used to pay for the increase in employee National Insurance thresholds proposed by the Conservative Party, as well as revenues from increases in Capital Gains Tax rates for non-business assets as described below. The increase in employer National Insurance thresholds proposed by the Conservatives will go ahead in order to stop the planned jobs tax.

* We will further increase the personal allowance to £10,000, making real terms steps each year towards meeting this as a longer-term policy objective. We will prioritise this over other tax cuts, including cuts to Inheritance Tax.

* We will also ensure that provision is made for Liberal Democrat MPs to abstain on budget resolutions to introduce transferable tax allowances for married couples without prejudice to the coalition agreement.

* We will reform the taxation of air travel by switching from a per-passenger to a per-plane duty, and will ensure that a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.

* We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities.

* We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals.

* We will increase the proportion of tax revenue accounted for by environmental taxes.

* We will take measures to fulfil our EU treaty obligations in regard to the taxation of holiday letting that do not penalise UK-based businesses.

* We will review the taxation of non-domiciled individuals.

Full Conservative and Liberal Democrat Coalition Government Agreement

Election 2010 Coalition Government : Banking

Election 2010 Coalition Government : Business

Election 2010 Coalition Government : Civil Liberties

Election 2010 Coalition Government : Communities and Local Government

Election 2010 Coalition Government : Consumer Protection

Election 2010 Coalition Government : Crime and Policing

Election 2010 Coalition Government : Culture, Olympics, Media and Sport

Election 2010 Coalition Government : Defence

Election 2010 Coalition Government : Deficit Reduction

Election 2010 Coalition Government : Energy and Climate Change

Election 2010 Coalition Government : Environment, Food and Rural Affairs

Election 2010 Coalition Government : Equalities

Election 2010 Coalition Government : Europe

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Election 2010 Coalition Government : Foreign Affairs

Election 2010 Coalition Government : Government Transparency

Election 2010 Coalition Government : Immigration

Election 2010 Coalition Government : International Development

Election 2010 Coalition Government : Jobs and Welfare

Election 2010 Coalition Government : Justice

Election 2010 Coalition Government : National Security

Election 2010 Coalition Government : NHS

Election 2010 Coalition Government : Pensions and Older People

Election 2010 Coalition Government : Political Reform

Election 2010 Coalition Government : Public Health

Election 2010 Coalition Government : Schools

Election 2010 Coalition Government : Social Action

Election 2010 Coalition Government : Social Care and Disability

Election 2010 Coalition Government : Taxation

Election 2010 Coalition Government : Transport

Election 2010 Coalition Government : Universities and Further Education

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