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U.K. Liberal Democrats Push to Raise Tax Threshold

March 8 (Bloomberg) -- The Liberal Democrat party will push to raise the amount people can earn before they pay income tax to 12,500 pounds ($20,900) if it remains in the government after the 2015 election, according to Chief Secretary to the Treasury Danny Alexander.

The government can’t only “rely on cutting public spending and targeting welfare” to reduce the budget deficit and should ensure that the rich “pay their fair share” Alexander told his party’s spring conference in York, England, today. The party, which has suggested increasing the threshold before, will include the new level in its election manifesto next year, he said.

An increase to the income tax threshold to 10,000 pounds, one of the Liberal Democrats’ central policies in the 2010 election, will be fully implemented starting next month. Both the Liberal Democrats their governing-coalition partner, Prime Minister David Cameron’s Conservative Party, are eager to claim credit for it.

“We have had to fight for this at every budget and at every autumn statement since 2010,” Alexander said at the conference. “Now, belatedly, some Tories are lamely trying to claim credit. It must be hard to be a Tory in a Treasury delivering so much Lib Dem policy, so it’s no surprise if some of them have gone native.”

Poor Benefit

The tax cut is popular with politicians partly because it can be described as helping those who are paid the lowest, though it actually benefits earners most of the way up the income scale. According to the Institute for Fiscal Studies, helping the poor becomes more expensive as the threshold rises.

With 14 months to go before the general election, rising energy costs and stagnant wages are continuing to erode household budgets, helping the Labour Party maintain a lead of about five percentage points over the Tories in opinion polls.

Cameron said this week that the minimum wage will rise by more than inflation this year for the first time since 2008, sparking tensions with the Liberal Democrats by making the announcement before the increase had been agreed on by the government.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Ross Larsen, Dan Weeks

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