Vincent Cable

The Liberal Democrats have said their financial plans would see a typical family paying about £450 a year less in tax than under the present government.

Treasury spokesman Vincent Cable indicated that lifting the threshold at which stamp duty takes effect would be a key priority.

The party is set to unveil further details of its policies on Monday, with the publication of its "alternative Budget".

Cable said that first time buyers were being "squeezed" out of the market.

"By failing to uprate the stamp duty threshold Gordon Brown has hit first time buyers and those on low incomes the hardest," he said.

"By pledging to increase the threshold to £150,000, the Liberal Democrats will make it possible for many first time buyers to buy a property without facing this tax."

Other policies backed by the party include a new 50 per cent top rate of income tax for those earning over £100,000.

"That is used for very specific purposes - to cut students' tuition top up fees, to get rid of some of these very unfair charges on care for the elderly personal care charges and for keeping down the rate of local taxation," Cable told GMTV's Sunday Programme.

He added that the move from council tax to a local income tax system would be "enormously beneficial" for those earning middle and low incomes.

"We are not going to increase the general level of taxation, it's unnecessary, it's not desirable, but we want to make the tax system fairer," Cable said.

The Lib Dems say a typical family would pay about £450 a year less in tax under their proposals.

Labour, however, attacked the Lib Dem plans with a warning that they would leave a couple on average earnings worse off.

"The Liberal Democrat plans say that the average national rate of local income tax under their plans would be 3.75p," said Cabinet minister Alistair Darling.

"For a couple on average earnings with a combined income of £41,000 this would mean an increase in income tax of £1,170.

"Compared to an average council tax per dwelling of £908 this would leave a couple on average earnings over £260 worse off under Liberal Democrat plans."