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10p tax review – a must



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Published Date: 16 April 2008
Any tax hike for those on low incomes is wrong.
Although the recent simplification of the tax system sees many low income families and pensioners better off there are some losers. That's why I have written to the Prime Minister, Labour Party Chair Harriet Harman and the Treasury clearly stating that something must be done to put right the unintended consequences of the change.

As a Labour MP I have been proud of the focus that our Labour Government has placed on improving incomes for those who have the least. We introduced the minimum wage, tax credits and boosted a whole range of employment rights. We targeted resources on poor families meaning 700,000 fewer children are now living in poverty and we aim to eradicate it by 2020. The Pension Credit system we introduced has lifted over two million pensioners out of poverty. These are all significant achievements although we always need to do more.

However, before talking about what needs to be done I firstly want to clearly identify the problem. Some of the recent stories being circulated are wide of the mark.

The tax simplification measures which have just come into effect ensure that some 16 million families will be better off and in particular pensioners over 65 and families with children will see a rise in their income.

The changes to the base rate of income tax (from 22 to 20p) combined with increased personal allowances and national insurance threshold mean that anyone who earns over £15,080 gains overall.

The substantial increase in Working Tax Credit means that all those who earn from £8,612 (30 hours a week on the minimum wage) up to £13,000 will be better off.

There are, however, those who lose out. Those who earn between £13,000 and £15,000 a year will lose out by a small amount – less than £1 a week. There is also a group who work less than 30 hours a week who will be worse off from the abolition of the 10p band. However, the maximum loss for someone who works is £152.40 a year (£2.93 a week). This would be the case for someone earning £143 a week. Clearly much less than the £500+ figures that have been bandied about.

But the simple fact is that a significant number of people in Hastings fall into these income brackets and they cannot afford to lose anything. I have therefore been forcefully calling upon the Government to find a solution. Indeed I produced a policy paper suggesting a solution which can be obtained by contacting my office.

Those on low incomes must always be a priority and I can assure you I will continue to demand a solution that addresses these unfortunate unintended consequences.

I want to finish, however, on yesterdays visit by David Cameron. I understand the Conservatives are suggesting we reinstate the 10p rate but without explaining how they would fund the £8billion it would cost. £8billion is simply not affordable in the current global financial climate. That money has already been redistributed so we need to find a solution that targets simply those who have lost out.

No one can seriously believe the Tories care for the less well off when you consider the spiralling poverty they oversaw in the 80s and early 90s. Its not David Cameron's fault that he's a rich Old Etonian. But it is his fault that he opposed the minimum wage, that he opposed tax credits and was previously considering a flat tax (meaning those on the minimum wage and millionaires pay the same). Hardly policies that have the best interests of Hastings at heart. His 'crocodile tears' fool no one.

The full article contains 623 words and appears in n/a newspaper.
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  • Last Updated: 17 April 2008 11:49 AM
  • Source: n/a
  • Location: Hastings
 
 
  

 
 


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