The 10p rate of tax
From this April the 10p rate (the starting rate) of income tax was abolished. This was announced in last year's budget. At the time it was hardly reported at all - with many media stories talking up the tax-cut from 22p to 20p for the basic rate, leaving many low-income earners out in the cold.
Labour introduced the 10p rate (the lowest level income tax in over three decades) and lowered the basic rate to 22p from 23p in 1999. This along with the minimum wage helped things on the ground a lot.
Why Gordon Brown carried this out in the last budget escapes me, at the time I thought it was simply a matter of scrapping the 10p rate to fund his 2p tax cut for the basic rate, and get all the praise from the media before he entered number 10, perhaps that should still be considered the leading hypothesis.
There have been a number of motions put forward expressing concerns over scrapping the 10p rate, as of writing 73 Labour MPs have so far signed them. Hope isn't lost yet for reversing this change, a number of Labour MPs have said they will try and fight the government over this issue, parliament returns on the 21st, so we'll see what happens.
The Tories are of course using this to their advantage, of course they have no alternative and if they were in power they would never of introduced anything this radical in the first place. I've yet to see any Tory MPs joining the rebel Labour MPs in support for reintroducing the 10p rate - don't hold your breath on that one, they're more interested in getting out of inheritance tax on their £1 million homes.
Where do I stand on this issue? Short term, the 10p rate should be reintroduced. If that means putting an extra couple of pence on the higher rate (over £36,000 per year) of income tax to fund it, so be it.
Labour introduced the 10p rate (the lowest level income tax in over three decades) and lowered the basic rate to 22p from 23p in 1999. This along with the minimum wage helped things on the ground a lot.
Why Gordon Brown carried this out in the last budget escapes me, at the time I thought it was simply a matter of scrapping the 10p rate to fund his 2p tax cut for the basic rate, and get all the praise from the media before he entered number 10, perhaps that should still be considered the leading hypothesis.
There have been a number of motions put forward expressing concerns over scrapping the 10p rate, as of writing 73 Labour MPs have so far signed them. Hope isn't lost yet for reversing this change, a number of Labour MPs have said they will try and fight the government over this issue, parliament returns on the 21st, so we'll see what happens.
The Tories are of course using this to their advantage, of course they have no alternative and if they were in power they would never of introduced anything this radical in the first place. I've yet to see any Tory MPs joining the rebel Labour MPs in support for reintroducing the 10p rate - don't hold your breath on that one, they're more interested in getting out of inheritance tax on their £1 million homes.
Where do I stand on this issue? Short term, the 10p rate should be reintroduced. If that means putting an extra couple of pence on the higher rate (over £36,000 per year) of income tax to fund it, so be it.
posted by Paul Smith at
Thursday, April 17, 2008
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