Clegg defeats rebels over LibDem tax plans

By Tim Castle

LONDON (Reuters) - Nick Clegg won his first conference showdown as Liberal Democrat leader on Monday as delegates backed his plans to adopt a manifesto of lower taxes and lower government spending.

Party members debating in Bournemouth rejected a rebel amendment which would have tied the opposition LibDems to making reducing inequality a greater priority than tax cuts.

Instead they backed Clegg's plans to find tax cuts from a review of 20 billion pounds of public expenditure if the party wins the next election, due in 2010.

These will come on top of the party's existing policy of a 4p cut in the starting rate of income tax, funded by green taxes and reductions in tax breaks enjoyed by the wealthy.

Clegg had invested significant political capital in getting the proposals accepted, which he called "the most redistributive tax package proposed by any party in modern times."

The party will now go into the next election promising large tax cuts for the poorest as well as lower public expenditure.

It is a more radical tax policy than that currently offered by the Conservatives, traditionally the party of lower taxation, who say they would stick to Labour's spending plans if elected.

LibDem MP Paul Holmes, one of the amendment's authors, said investment in public services had to come before overall cuts in taxation.