Alistair Darling must do more to compensate the 1.1 million low-income households who remain worse-off by up to £112 a year as a result of the scrapping of the 10p starting rate of income tax, an influential committee of MPs said.
And the Chancellor must ensure that the £2.7 billion package he announced last month to mitigate the impact of the 10p decision is not simply a one-off gesture, said the House of Commons Treasury Committee in a report.
Changes to the tax system should be announced by the autumn to ensure that there are no losses in years to come for any of the 5.3 million households affected by the initial decision to scrap the rate.
The report said Mr Darling’s May 13 decision to raise the income tax threshold by £600 was “probably the least bad option” to offset the impact of the abolition of the 10p rate, announced in Prime Minister Gordon Brown’s final Budget as Chancellor last year.
The cross-party committee called for the creation of a Poverty Commission to examine the effect of public policy on the poor, as well as the inclusion of a Household Impact Assessment in future Budgets and Pre-Budget Reports to analyse the impact of their measures on individual and family finances.
But the package did not go far enough and was “not well-targeted”, as £2 billion of the extra money went to middle-income workers who did not lose out from the 10p decision, while 1.1 million of those worst affected continue to be out of pocket.
6 Comments
Work , pay , tax tax and more tax.
Skive, no tax.
Go figure.
The way it’s going more low income people are going to work out that it is just not worth it anymore.
Very politically astute.
Why do people keep moaning about how bad they are off now the 10p tax has gone.
What about us who have to pay more than 25% tax to support all the dossers,single moms,skivers and immigrants who come live here because were a soft touch!
Council tax up.morgages up.food up.Everything up apart from the number of people being dragged off the dole and made to get a job!
Wont work no money end of!
I have figured it out, I packed my bags years ago and got a fantastic job in the Middle East. Great job, no tax. Great holidays. No tax. Scuba diving . No tax. Cool beer. No tax. Apart from the trips back to Old Blighty now and then where I get robbed blind at the petrol pumps.
Yes, bit odd moaning about the 10p tax rate going. Funnily enough people didn’t complain when it came in only a few years ago either.
I’m hit by the change in tax rate.
Come to think of it, wasn’t so long back there wasn’t a 10p rate and many of us were paying 25% tax.
I just love how the media took almost a YEAR to pick up on the story about the rate chance, when it was in the March 2007 budget when it was announced. Its nothing to do with Darling, just down to Brown when he was chancellor.
breeze 2 i can see your not on minimum wage you should try it before spouting off theres a lot of people who would like yo pay more tax if your on the higher rate you must be earning it ps if your a pen pusher learn to spell
Just to make it clear, I am not on minimum wage and do pay higher tax. In the past I’ve paid the highest tax bracket too. What I find amazing is that there are good honest people out there willing to work in hard jobs for little reward rather than go on the dole. These people are close to the edge all the time but have the dignity to hold their own head up. Along comes a tax that pushes many of them in to dispair and people criticise THEM. We are not talking about lazy dossers here, the dossers are on benefits and couldn’t give a rip, I’m on about those that want to work. I’ve had jobs at 70K+ and I’ve stacked shelves. Maybe it’s seeing both ends that makes me respect those that are willing to work and I think we are ALL taxed too much to support far too many people who think citizenship entitles them to doss and criticise those that do work. Rant over!