Save the 10p starting rate!

[afleitch]

http://news.bbc.co.uk/1/hi/uk_politics/7330007.stm

''Gordon Brown has moved to quell a backbench revolt over the abolition of the 10p income tax band amid fears it will hit some low-paid families. Mr Brown has assured former Labour whip Greg Pope - who tabled a Commons motion calling for action - he will look again at the impact of the changes. Mr Pope has withdrawn the motion, which was signed by about 30 Labour MPs. It comes after a minister criticised alcohol tax rises in this year's Budget, although he later backtracked. Senior ministers have denied the government is suffering discipline problems.''

Labour Leeds North East MP Fabian Hamilton said he feared the change would hit young, single people without families.

---

Indeed. Another kick in the gut for young workers. Of course retaining the 10p rate would blow a vast hole in the treasury's figures. This could easily be covered by halting the 2p cut in the 22p rate. But then the government have the middle class and the marginals to think about....

[Filuwaúrdjan]

Basically, trying to be clever isn't always very clever.

Of course retaining the 10p rate would blow a vast hole in the treasury's figures.

Yes. But finding some other way of papering up the gap (if that's the right word to use) in some people's finances caused by the abolition of the 10p rate presumably wouldn't, at least not to the same extent. Although the best solution () would be to reinstate the 10p rate and keep the increases in tax credits and so on.

[Silent Hunter]

"Young, single people without families".

So much for the Daily Mail's "5.3 million families" comment...

[Bono]

This is a Good Thing, it makes the tax flatter. Though obviously it would be better if they ditched the 20p rate and closed tax credits. Now they just need to end the 40p rate, and the UK would have a perfectly sensible 20% flat tax--possibly raising the personal exemption.

[The Man From G.O.P.]

This is a Good Thing, it makes the tax flatter. Though obviously it would be better if they ditched the 20p rate and closed tax credits. Now they just need to end the 40p rate, and the UK would have a perfectly sensible 20% flat tax--possibly raising the personal exemption.

^^^^ Why Libertarians need medication.

There's no flat tax coming, there's no expectation of one, just the shifting of tax to try and shift the vote.

[afleitch]

"Young, single people without families".

So much for the Daily Mail's "5.3 million families" comment...

Slight exaggeration from the Mail. However the Treasury's own figures give a figure of around 1.9m including families and part time workers. If you include those who don't claim tax credits its closer to 2.5.

And remember Ivan, these are the poorest workers who will be affected. So don't be dismissive because a paper gets the figures wrong and those who loose out are just single people trying to get by.

[Silent Hunter]

I was responding to the Mail's distortion.
 
I sympathise with the young workers and if it has a bad impact, it should be reversed.

However, a fair few of them could give up smoking and save at least a tenner a week- Cancer Research estimates 32% of 20-24 year olds smoke. It would help in the long term too. Doesn't the whole worse-off calculation taking cigarette taxes into account as well?

[afleitch]

I was responding to the Mail's distortion.
 
I sympathise with the young workers and if it has a bad impact, it should be reversed.

However, a fair few of them could give up smoking and save at least a tenner a week- Cancer Research estimates 32% of 20-24 year olds smoke. It would help in the long term too. Doesn't the whole worse-off calculation taking cigarette taxes into account as well?

I don't smoke and I'm down £100 a year.

[Bono]

This is a Good Thing, it makes the tax flatter. Though obviously it would be better if they ditched the 20p rate and closed tax credits. Now they just need to end the 40p rate, and the UK would have a perfectly sensible 20% flat tax--possibly raising the personal exemption.

^^^^ Why Libertarians need medication.

There's no flat tax coming, there's no expectation of one, just the shifting of tax to try and shift the vote.

I know there isn't, the last sentence is just my wishful thinking. However, this still made the tax flatter, which greatly reduces distortions, so it's a good move. Of course, lowering the top rate would be much better, since 40% is just an obscenely high rate, and it kicks in at a ridiculously low level too.

[afleitch]

I know there isn't, the last sentence is just my wishful thinking. However, this still made the tax flatter, which greatly reduces distortions, so it's a good move. Of course, lowering the top rate would be much better, since 40% is just an obscenely high rate, and it kicks in at a ridiculously low level too.

If you think thats what it's actually done to the tax system in this country then you need to do some homework. Lets say the 10p abolition and other changes in taxation have even got Alan Duncan fuming.

[The Man From G.O.P.]

This is a Good Thing, it makes the tax flatter. Though obviously it would be better if they ditched the 20p rate and closed tax credits. Now they just need to end the 40p rate, and the UK would have a perfectly sensible 20% flat tax--possibly raising the personal exemption.

^^^^ Why Libertarians need medication.

There's no flat tax coming, there's no expectation of one, just the shifting of tax to try and shift the vote.

I know there isn't, the last sentence is just my wishful thinking. However, this still made the tax flatter, which greatly reduces distortions, so it's a good move. Of course, lowering the top rate would be much better, since 40% is just an obscenely high rate, and it kicks in at a ridiculously low level too.

I agree totally, but it's not ok to fcuk the lowest bracket in the meantime.

[Peter]

I am better off under the new tax bands - and anybody in a comparable domestic situation earning £15100+ is according to my understanding. Admittedly I've lost £5 to the increase in car tax and will probably feel the alcohol tax pain, but for young professionals, it wasn't a bad budget. But then that was exactly what was intended.

[afleitch]

Charities will also loose out to due to the changes and their effect on Gift Aid with charities now able to claim 25p of every £1 back as opposed to 28p. Darling did announce three years temporary relief to allow charities to budget for the years ahead but after this, charities will be hit by an effective 3% cut in donations.

[Silent Hunter]

Charities will also loose out to due to the changes and their effect on Gift Aid with charities now able to claim 25p of every £1 back as opposed to 28p. Darling did announce three years temporary relief to allow charities to budget for the years ahead but after this, charities will be hit by an effective 3% cut in donations.

I don't think it's quite 3%- it's £1.28 reduced to £1.25. They're claiming the income tax paid on it already.

That said, your points are valid.

Perhaps we ought to alter the Tax Credits so they're directly in less taxes?

[The Man From G.O.P.]

Charities will also loose out to due to the changes and their effect on Gift Aid with charities now able to claim 25p of every £1 back as opposed to 28p. Darling did announce three years temporary relief to allow charities to budget for the years ahead but after this, charities will be hit by an effective 3% cut in donations.

I don't think it's quite 3%- it's £1.28 reduced to £1.25. They're claiming the income tax paid on it already.

That said, your points are valid.

Perhaps we ought to alter the Tax Credits so they're directly in less taxes?

Snicker.... has it been that long since you had a smaller state, or have the idea pass through your head?

[afleitch]

Charities will also loose out to due to the changes and their effect on Gift Aid with charities now able to claim 25p of every £1 back as opposed to 28p. Darling did announce three years temporary relief to allow charities to budget for the years ahead but after this, charities will be hit by an effective 3% cut in donations.

I don't think it's quite 3%- it's £1.28 reduced to £1.25. They're claiming the income tax paid on it already.

That said, your points are valid.

Perhaps we ought to alter the Tax Credits so they're directly in less taxes?

A stengthening school of thought in the Conservative Party is simply to abolish the tax credit's system...coupled with the reduction of income tax for all those earning less than £15,000 to 0% (That includes no National Insurance contributions too) This would be payed for with the abolition of the ax credits system (which can 'credit'comfortable incomes in the region of £30,000 a year) and.....brace yourself...1p on the top tax rate.

So no paperwork, no over payments, no means testing, no exemptions. Earn £12,000 a year? You pay no tax on your income. There is no reliance on the state

I am hoping the issue is pressed during this years conference.

[afleitch]

Some stats regarding the changes;

The Treasury's own figures confirmed that 5.3 million families will lose out in total, even when the changes to tax credits are taken into account. The amount lost by each family could be anything up to £446 a year
Who will be affected?

2.2 million single working people with no children, not entitled to WTC, or working less than 30hrs per wee

1.2 million two earner couples - similar circumstancesas above

0.7 million two earner couples with children.

0.5 million non-workers who pay more tax on their taxable benefit or pensions than they gain. Those might be early retirees or incapacity benefit claimants.

0.4 million one earner couples without children, who will be in a range of about £17,000 to £18,500 where they are not compensated.

0.3 million women between the ages of 60 and 64 who do not get tax credits and are too young to be compensated by the rise in the pensioner tax allowance.


Low Pay Commission: “We are particularly concerned about the
effect of the abolition of the 10p starter rate on young people in
work who are not eligible for Working Tax Credit” (Low Pay
Commission, September 2007)

Lynne Jones MP (Lab): "We have to some extent neglected poorer
people who haven't got children. There are many people who are
single who are struggling on very low incomes" (March 2007)

Frank Field MP (Lab): “Constituents of mine who earn only one
sixth of what we earn are paying £3 a week more''

[Silent Hunter]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

[afleitch]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

Mr Fallon: “Mr Neale, Mr Chote gave evidence to us on Monday
and said that there were about 5.3 million families losing out from
the Budget. What is your figure?”

Mark Neale (HM Treasury, Managing Director, Budget, Tax &
Welfare): “I think the figure that Robert Chote gave you is in the
right ball-park.”

---

It's the treasuries own figures. The Tories are, as good opposition parties do, seizing upon that.

[Silent Hunter]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

Mr Fallon: “Mr Neale, Mr Chote gave evidence to us on Monday
and said that there were about 5.3 million families losing out from
the Budget. What is your figure?”

Mark Neale (HM Treasury, Managing Director, Budget, Tax &
Welfare): “I think the figure that Robert Chote gave you is in the
right ball-park.”

---

It's the treasuries own figures. The Tories are, as good opposition parties do, seizing upon that.

"Losing out from the budget" does not equal "losing out from the rate change". Remember other stuff is going up as well, like the aforementioned tobacco and alcohol.

[afleitch]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

Mr Fallon: “Mr Neale, Mr Chote gave evidence to us on Monday
and said that there were about 5.3 million families losing out from
the Budget. What is your figure?”

Mark Neale (HM Treasury, Managing Director, Budget, Tax &
Welfare): “I think the figure that Robert Chote gave you is in the
right ball-park.”

---

It's the treasuries own figures. The Tories are, as good opposition parties do, seizing upon that.

"Losing out from the budget" does not equal "losing out from the rate change". Remember other stuff is going up as well, like the aforementioned tobacco and alcohol.

The quote was from the Treasury Select Committee in April 2007. It concerns last years budget.

[Silent Hunter]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

Mr Fallon: “Mr Neale, Mr Chote gave evidence to us on Monday
and said that there were about 5.3 million families losing out from
the Budget. What is your figure?”

Mark Neale (HM Treasury, Managing Director, Budget, Tax &
Welfare): “I think the figure that Robert Chote gave you is in the
right ball-park.”

---

It's the treasuries own figures. The Tories are, as good opposition parties do, seizing upon that.

"Losing out from the budget" does not equal "losing out from the rate change". Remember other stuff is going up as well, like the aforementioned tobacco and alcohol.

The quote was from the Treasury Select Committee in April 2007. It concerns last years budget.

It's still not the same thing. Other stuff went up in 2007 too.

[afleitch]

Where's that from? It sounds like a Tory press release.

When I read 5.3 million families, I make it 15 million people. This appears to be 5.3 million people.

Mr Fallon: “Mr Neale, Mr Chote gave evidence to us on Monday
and said that there were about 5.3 million families losing out from
the Budget. What is your figure?”

Mark Neale (HM Treasury, Managing Director, Budget, Tax &
Welfare): “I think the figure that Robert Chote gave you is in the
right ball-park.”

---

It's the treasuries own figures. The Tories are, as good opposition parties do, seizing upon that.

"Losing out from the budget" does not equal "losing out from the rate change". Remember other stuff is going up as well, like the aforementioned tobacco and alcohol.

The quote was from the Treasury Select Committee in April 2007. It concerns last years budget.

It's still not the same thing. Other stuff went up in 2007 too.

Ivan, the TSC was adressing questions on changes to the tax system and tax credits specifically.

[Filuwaúrdjan]

"Family" is a tricky (and emotive) word and should really be avoided with this sort of thing. The figure seems more realistic if the word "family" is replaced with "household".

[afleitch]

"Family" is a tricky (and emotive) word and should really be avoided with this sort of thing. The figure seems more realistic if the word "family" is replaced with "household".

True. But sometimes you have to be emotive in order to get across the immediacy of a problem that the Treasury didn't look at in November '07 and again in March '08 despite assurances to the Labour backbench. It's not just the Tories who have been evoking the 'f' word mind....