The Liberal Democrats will Thursday call for the government to accelerate plans to exempt more low-paid workers from paying income tax, hoping to fund the move with an as yet unspecified raid on the wealthy. In a speech in London which may irritate some on the right wing of the Conservative-led coalition, Deputy Prime Minister Nick Clegg will warn that “household budgets are approaching a state of emergency, and the government needs a rapid response.” Chancellor George Osborne is expected to announce an increase in the personal allowance for income tax in his March budget, but there is no indication yet whether he will meet Clegg’s challenge. Britain’s economy contracted in the last three months of 2011 and, with unemployment rising and wages stagnant, the government is facing greater pressure to soften its austerity plan of big spending cuts and tax rises. Clegg’s push for a smaller tax burden on the lowest paid in the economy, however, would be a fiscally-neutral move. “I want to help hard-pressed and hardworking families. If that means asking more from those at the top, so be it,” Clegg will say, according to extracts of his speech released in advance by his office. The coalition has already committed to raising the threshold at which employees start paying tax to 10,000 pounds by 2015. That is a crucial pledge for the Liberal Democrats, who have had to abandon several policies since signing up to a coalition in 2010 which has damaged their popularity. The personal allowance for income tax will rise in April to 8,105 pounds from the current 7,475 pounds for the year 2012/13. “I want the coalition to go further and faster in delivering the full 10,000 pounds allowance because the pressure on family finances is reaching boiling point,” Clegg will say. A source close to Clegg said the Liberal Democrat leader and party colleague Danny Alexander — Chancellor George Osborne’s number two at the Treasury — will be pressing the case within government ahead of the March 21 annual budget. “The planned steady increase aimed at delivering the 10,000 pound personal allowance by 2015 just won’t cut it anymore,” the source said. Despite fears that Britain is on the verge of another recession, the coalition has stood by its deficit reduction plan and insisted it will see through several years of austerity to get Britain’s public finances back in balance. A deteriorating economy, however, could mean more spending cuts and tax rises are needed to keep the government’s plan on track. Either way, any attempts to soften the impact of austerity on the poorer parts of society would need to be paid for through further spending cuts or tax rises elsewhere. “We cannot just cut taxes by raising borrowing — that is just extra taxation deferred. And it would undermine our success in restoring stability and credibility to the public finances. So we need to find the money,” Clegg will say, urging instead “those who are better off, or who act in ways that damage our environment” to pay their fair share. (Reporting by Matt Falloon)