NORTH DEVON WILL FEEL THE PINCH WITH THE ABOLITION OF THE 10P TAX RATE
April 29, 2008 10:09 AM
So the Government is pressing ahead with the abolition of the 10 pence tax rate, with many people in low income areas - like North Devon - destined to lose out badly.
The Chancellor's supposed concessions of last week will not make a blind bit of difference to the millions already feeling the pinch, and amount to bribes and half promises.
The doubling of the 10p income tax starter rate was announced in last year's budget. Minutes later it was condemned on the floor of the Commons by my colleague Ming Campbell. But critics on the backbenches only woke up now and started shouting about how terrible it was.
So it is disappointing that they have caved in. The offer to compensate low income earners is vague promises of "jam tomorrow". Ministers said they had no money to reverse the tax rise, and haven't explained how this compensation will be funded.
Meanwhile those on low incomes lose out as the tax rise bites into pay packets and pensions. Ironically, as vague concessions for the lowest paid were dragged out of Government, the door to Downing Street was wide open for bankers to scoop a £50 billion bailout to keep the banking system afloat.
Those unable to claim tax or pension credits and earning less £18,500 now see their tax bill rise. They do not earn enough to gain from the 2p cut in standard rate income tax.
Five million low earners will be hit. These include low paid couples or single people who do not have access to Child Tax Credit, and women aged 60-65 whose pensions or salaries will be taxed at a higher rate. Carers, who are only allowed to work 14 hours a week to claim Carer's Benefit, are affected in very large numbers.
In 1999, when he introduced the 10p tax rate, Gordon Brown proclaimed it as 'the lowest starting tax rate since 1962' - a tax cut to 'help all lower and middle income families'. Now he is abolishing it.
Although he now pledges to help some of those affected, details will not be announced until the end of the year. It is not clear that the extra benefits will be backdated. During this time people will continue to struggle to pay double their previous tax rate and future changes may still fail to compensate those hit hardest.
In Britain today the poorest pay a higher proportion of their income in tax than the very wealthy. Low and middle income earners already shoulder too heavy a tax burden.
And on top of this is the unfair Council Tax!
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