LONDON, May 19 (Reuters) - Early signs of the policy tensions that will test Britain's new coalition government have surfaced, with a senior Conservative legislator attacking the taxation stance of his party's Liberal Democrat junior partners.
The Conservatives won most parliamentary seats in a May 6 election but fell short of an overall majority and had to join forces with the third-placed Lib Dems to take office last week, ending 13 years of government by the Labour Party.
The centre-right Conservatives made several big concessions towards the centre-left Lib Dems to secure their support, including on tax. The Conservatives shelved a cherished promise to cut inheritance tax, for example, while adopting a Lib Dem ambition to raise the threshold for paying income tax.
John Redwood, a Conservative member of parliament (MP) and former minister, has published a blog in which he slams Lib Dem beliefs on taxation and seeks to counter their influence on a specific policy debate about capital gains tax.
"Deep in Lib Dem DNA is the Robin Hood principle — tax the rich and give to the poor. It is superficially popular, and gives believers a feeling of moral superiority," Redwood wrote.
A representative of the right wing of the Conservative Party who was once an adviser to former Prime Minister Margaret Thatcher, Redwood particularly objected to the Lib Dem idea of taxing capital gains at the same rates as income.
"This is anathema to most Conservatives," he wrote, adding that the policy would deter investment and send talent abroad.
"OPEN TO PERSUASION"
Speaking to Reuters on Wednesday, Redwood said his intention was not to rebel against the government but rather to make a helpful contribution to discussions within the coalition.
"I’m not planning a rebellion. There’s nothing to rebel against. We have a government which is going to work on a new policy. It’s open to persuasion and discussion. I’m helping them, as I see it," he said.
But his strongly worded blog, in which he disclosed that he and other MPs had "worked into the night" on Monday to come up with alternative proposals on capital gains tax, gave an indication of the fierce battles ahead for the government.
In their coalition agreement, the two parties committed only "to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities".
That could potentially mean that capital gains tax on the sale of assets such as properties or shares would rise, to the detriment of some of Britain’s more affluent households who tend to be Conservative supporters.
In his blog, Redwood suggested raising capital gains tax on "short term gains made by speculators" while exempting from it any investment gains made over five years or more.
