Bills would be cut through new tax rate

The move, seen as an opening shot in campaigning for May's elections, would also fund the abolition of student tuition fees.

The proposals in the Lib Dems' alternative Budget would see a 50p income tax rate introduced for people earning more than �100,000.

And they also include an extra �2bn spending on the UK's rail network.

Our plans are for a fairer tax system with the super-rich paying a little more to help the other 99% Matthew Taylor Liberal Democrat treasury spokesman

The plans back the government's National Insurance increase to increase NHS funding, while they reiterate pledges to increase basic state pensions and provide free care for the elderly.

The Lib Dems have high hopes for May elections amid speculation they could replace the Tories as the official opposition to Labour over the next few years.

Lucky

Plans for a 50p tax rate were portrayed by Liberal Democrat chief treasury spokesman Matthew Taylor as working towards "a fairer tax system".

Taylor says plan would be "a fairer tax system"

He claimed that under Labour the poorest 20% of households pay 40% of their income in tax, with the richest fifth paying 35%.

"Our plans are for a fairer tax system with the super-rich - the one percent of taxpayers lucky enough to earn over �100,000 a year - paying a little more to help the other 99%," he said.

The Lib Dems will be hoping the redistributive measure will win backing from disaffected Labour supporters in the party's traditional heartlands while not alienating wavering Tories.

"The �4.5 billion we will raise from the super-rich can be used to scrap tuition and top-up fees which are unfair taxes on students and their families and cut �100 off every council tax bill - regressive tax that Conservative and Labour governments have forced up," said Mr Taylor.

'Strangled'

He vowed to also cut business red tape and steer clear of new rises in business taxes.

He said: "We need to let Britain's manufacturers, retailers and entrepreneurs get on with business without being strangled by government."

He said Labour was now spending the right amount on public services having "fallen in line" with Liberal Democrat thinking.

"So, we do not now need to raise public expenditure, but we do need to spend the money more wisely," he said.