Wednesday, April 09, 2008

Abolishing the 10p tax rate - so we will review our tax policy now will we?

I am very pleased to see Vince Cable is making a fuss about the impact on the low paid of removal of the 10p tax rate and drawing attention in particular to the effect on service personnel. However, I am also a little cross. Myself and others (who will remain nameless because of the Chatham House Rule) raised this when we were discussing our own tax policy at FPC last year, but were told in no uncertain terms that the tax envelope we were considering did not include restoring the 10p rate. After all we were going to cut the basic rate by 4p weren't we? However, no proper analysis had been done of the impact this cut and replacement with local income tax, would have on the low paid.

So, my argument now, as it was then, is that we really should be radical about our tax policy. It is a nonsense and also highly discriminatory that we take tax off people who are on the minimum wage, giving it back to some in housing benefit, others in tax credits,(how much does that cost to administer - money that could be going straight into the pockets of the low paid) and leaving many single people, particularly those living in high cost areas, almost destitute. I trust that this belated concern about the abolishing of the 10p rate will lead to some serious rethinking.....but I am not holding my breath!


Alix said...

Am I just the only one being left out of some big tax secret here? I thought party policy was to abolish the 10p rate... and replace it with an extension to the tax free allowance. That's what the Fairer Greener Simpler paper says - have we gone back on this since last September and no-one's told me?

Agreed on the NMW though. If we're not careful the Tories are going to undercut us here. IMHO we should not fuss about raising the higher rate band to £50k and extend the 0% band to cover the NMW instead.

Laurence Boyce said...

Quite right Linda. It’s totally barking to tax people already on the minimum wage. Now are you coming to lunch or not?