» Monday, April 21, 2008

10p tax

Asked if the Prime Minister would regard a vote on the Budget as a confidence issue, the PMS replied that at this stage the amendment had not been tabled so we would have to wait and see what happened in Parliament during the course of today and the rest of this week.

Asked if the Prime Minister was prepared to allow the speculation about this being a confidence issue to continue, the PMS said that any vote on the Budget was an important vote but at the moment we had not yet seen what amendments would be tabled.

Asked repeatedly if the Prime Minister accepted that some people would be worse off as a result of the tax change, the PMS replied that the Prime Minister had been saying consistently that when you undertake a significant tax reform of the kind that was undertaken in the 2007 Budget, of course that would affect different groups in different ways. That was why, in the 2007 Budget, we provided an additional £3 billion to help people who were affected by the reforms that were made elsewhere in the Budget; there was an extra £1billion to increase the pension allowance; an extra £1 billion for the working tax credit and an extra £1billion for the child tax credit. These measures directly helped those people who were affected by the removal of the 10p rate. We had done a lot to help people on lower incomes since 1997 and as the Chancellor had said yesterday, we would continue to help people on low incomes in future Budgets and Pre-Budget Reports.

Asked if the Prime Minister recognised that there was a huge amount of anger on the backbenches regarding the 10p rate, the PMS replied that the Prime Minister recognised that when you took on a significant reform of this kind, people would be affected in different ways. It was important to remember that in the 2007 Budget we reduced the basic rate of tax from 22p to 20p and also, as was just mentioned, we had spent a considerable amount of money in that Budget to increase the working tax credit, the child tax credit and pensioner allowances.

Asked how many people would be worse off due to the abolition of the 10p rate, the PMS said that, as the Prime Minister had said previously, so much depended on the behavioural responses as well as individual family circumstances; tax credits were claimed based on family income, whereas tax changes affected individuals.

Asked if the scrapping of the 10p tax was done purely to pay for the 2% change in the basic rate, the PMS said no; it was part of a much wider package of reforms that had been made to the tax system. As was said at the time of the 2007 Budget, the 10p rate was introduced at a time when tax credits were at an early stage and over time, as tax credits had become more generous and developed, a more effective way of helping those on lower incomes was to provide support direct to them through the tax credit system.

Asked if the Prime Minister would be having discussions with MPs about the 10p tax, the PMS replied that the Prime Minister spoke to Labour MPs all the time, as you would expect.

original source.

Briefing took place at 11:00 | Search for related news

1 Comment »

  1. I have just received my RR pension one month after the annual increase which was £7.00p. I now find that I am worse off by £10.00p per month, not only have I lost the £7 increase, but I have also had a further £10 taken off me as well!
    I am disabled having had to retire early because of my disability and money is very tight and every penny is accounted for.
    Scrapping the 10p tax is outragous how are people supposed to live. My wife and I have not had a holiday for 7 years and cannot afford a car, our only luxury is our house and that has a mortgage.
    If you know of anyway to help our situation please advise.
    I have always been a strong Labour supporter as was my father before me, but I have lost faith with the political system and now I and my family do not vote at all.

    Comment by Nigel Vine — 1 May 2008 on 10:09 pm | Link

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