GEORGE Osborne wasted no time yesterday in pouring cold water on Nick Clegg's desire for a new wealth tax, insisting he did not want to drive wealth creators out of Britain.
The Chancellor made clear he had already taken steps to ensure the UK's highest earners paid more tax but insisted it was vital to hang on to entrepreneurs, who would help the economy recover.
"I do want the wealthy to make their fair contribution to reducing the budget deficit; that's why I have increased things like property taxes on very expensive homes," explained Mr Osborne on a visit to Sunderland.
"But, let's be clear, we don't want to drive away the wealth creators and the business leaders and the entrepreneurs who are going to create the jobs and help the economy move forward. We have to get the balance [right]. Yes, the wealthy have to pay more but let's not drive away the wealth creators."
Ahead of next month's Liberal Democrat conference, when delegates will debate tax, Mr Clegg floated plans for a "time-limited" wealth tax in a clear attempt to appeal to the grassroots, bruised by failures on the alternative vote and Lords reform.
"While I am proud of some of the things we have done as a Government I actually 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," said the Deputy Prime Minister.
"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," he added.
Mr Clegg admitted the depth of the economic crisis meant Britain was engaged in a "longer economic war rather than a short economic battle".
While the LibDem leader did not give any details on a time-scale for his wealth tax, Simon Hughes, his deputy, suggested it could last at least five years.
He argued that administering a wealth tax would not be difficult, saying: "In France, it's been done and it's not been a complication there and has been successful."
However, Professor John Kay, from the London School of Economics, pointed out very few countries had a wealth tax.
"They don't have such a tax because it is very difficult to make it work and almost impossible to make it work fairly," he said.
The LibDems have already proposed a mansion tax on homes worth more than £2 million. The time-limited wealth tax would be on top of this.
The latest proposal got short shrift from one senior Conservative. Bernard Jenkin, chairman of the Commons Public Administration Committee, dismissed it as "a pre-conference easy-clap line".
He said: "If the politics of envy made a country rich, we would be a very rich country."
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