Nick Clegg’s plan to tax the rich opens another rift in coalition government

THE rift among the leaders of the coalition deepened last night as Tory Chancellor George Osborne attacked Lib Dem  Deputy Prime Minister Nick Clegg’s plans for a new tax on the wealthy.

Mr Osborne warned that a new tax on the rich would risk driving away Britain’s wealth creators at a time when the UK economy is mired in recession.

In a move apparently designed to win back ground lost by the Lib Dems by agreeing to a cut in the top rate of income tax from 50p to 45p, Mr Clegg floated plans for a short-term wealth tax.

Mr Clegg insisted the temporary tax proposal would hit those with the highest assets rather than incomes.

“If we are going to ask people for more sacrifices over a longer period of time, a longer period of belt-tightening as a country, then we just have to make sure that people see it is being done as fairly and as progressively as possible,” he said.

“While I am proud of some of the things we have done as a government, I think we need to really hard-wire fairness into what we do in the next phases of fiscal restraint. If we don’t do that, I don’t think the process will be either socially or politically sustainable or acceptable.

“If we want to remain cohesive and prosperous as a society, people of very considerable personal wealth have got to make a bit of an extra contribution.

“In addition to our standing policy on things like the mansion tax, is there a time-limited contribution you can ask in some way or another from people of considerable wealth so they feel they are making a contribution to the national effort?”

But the idea was dismissed by Mr Osborne, who said: “I am clear that the wealthy should pay more, which is why in the recent Budget I increased the tax on very expensive property transactions.

“But we also have to be careful, as a country, we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.”

Senior Tory backbencher Bernard Jenkin dismissed the move as the “politics of envy” and warned against strangling the “goose that lays the golden egg”.

Labour said that Mr Clegg was trying to fool the electorate.

Shadow Treasury minister Chris Leslie said: “Nick Clegg is once again taking the British people for fools. He talks about a tax on the wealthiest, but he voted for the tax cut for millionaires in George Osborne’s Budget. And he has supported a failing economic plan which has pushed Britain into a double-dip recession and is leading to borrowing going up by a quarter so far this year.”

The public spat within the coalition appeared to do little to settle discontent in the Tory ranks, with a second senior backbencher in two days accusing Prime Minister David Cameron of giving the Lib Dems too much power.

After Tim Yeo, the chairman of the energy and climate change committee, said Mr Cameron needed to prove he is “a man not a mouse” and  build a third runway at Heathrow, Northampton South MP Brian Binley accused the Prime Minister of being the Lib Dems’ “chambermaid”.

In a post on his website, Mr Binley, the treasurer of the Tory backbench 1922 committee, wrote: “What the country, the Conservative party and the  captain of the ship needs now  is not so much a reshuffle as a rethink.

“The country needs a full-time Prime Minister and not a chambermaid for a marginal, irrelevant pressure group who have got him in a virtual armlock with a constant stream of threats to abandon ship.”