» Thursday, April 24, 2008

10p Tax

Asked how the Prime Minister felt about some negative reactions from businesses about the idea that the compensation package could be paid for in part by the minimum wage, the Prime Minister’s Spokesman (PMS) said that the Prime Minister and the Government’s view was as the Chancellor had set out in his letter yesterday when he said that that would be one of the options we would explore in the coming weeks and months.

Put that some businesses may think it strange that they should pick up the bill for a Government mistake, the PMS said that we were asking the Low Pay Commission to examine what the options were.

Put that that could be seen as putting political pressure on what should be a totally independent decision, the PMS said he did not accept that; what the Government was doing was asking the Low Pay Commission to do what it was there to do, which was to report on what changes could be made to the minimum wage regime to support younger workers.

Asked what the Prime Minister’s mood was given the week he had had, the PMS replied that the Prime Minister, as always, was focused and determined.

Asked if, on reflection, the Prime Minister thought that he should have acted sooner to address the concerns about the 10p tax rate, the PMS replied that the Prime Minister had been asked at length about all these issues yesterday in the round of interviews he did and there was nothing to add.

Asked how many people the Prime Minister was hoping to help through compensation, the PMS said that what the Treasury would do over the next few months, in advance of the Pre-Budget Report (PBR) was to come forward with proposals that would offset the average losses for those affected. The Treasury had already said that in relation to pensioners aged 60-64 there was the potential to use a mechanism, which already existed, to target support directly on those affected, and that was through the system for payments of the winter fuel allowance. In relation to other groups it was more complex as everyone’s situation was different; those affected were a diverse group and therefore it was not straightforward to target support to selected groups of individuals through the tax system. The Treasury would be working and focusing on all these matters over the next few months.

Put that it was impossible to help everyone, the PMS said that the Chancellor’s letter yesterday made clear that what we would be working towards was proposals that offset the average losses from the removal of the 10p rate.

Put that by describing it as the average was to concede that there would be losers, the PMS said that he was not conceding anything, he was just repeating what the Chancellor had set in his letter yesterday; everybody’s circumstances were different and many individuals themselves may not know directly how they were affected, so therefore it was not realistic to think that the Government had information on every single individual in this country with the degree of precision required to make those sorts of judgements. That was why, in the Chancellor’s letter yesterday, he had been talking about offsetting the average losses from the removal of the 10p rate.

Asked if the Government was hopeful that come the time of the PBR they could help all those they had identified as needing help, the PMS said that the Treasury would be concentrating on offsetting the average losses for this year as well as future years, as the Chancellor had said in his letter.

Asked if the word "backdated" was the right way to describe what would happen, the PMS said that journalists could describe it as they liked but the key thing was what the Chancellor had said this morning; that average losses would be offset for this, as well as future years.

Asked why the Government was going through a tortuous process of compensating people when they could just give money back by using tax allowances, the PMS replied that the reason that could not happen was because money would then go to everybody and it would be incredibly expensive, around £8 billion. It would mean giving money to individuals who were not affected by the removal of the 10p rate and therefore it would be very expensive and put public finances and the economy at risk.

Asked what the role of the Low Pay Commission was, the PMS said that the Low Pay Commission was being asked to do what it had been asked to do by the Chancellor in his letter yesterday, which was to report on what changes could be made to the minimum wage regime to support younger workers.

Asked if the backdated money would be an open-ended proposal, the PMS said that the exact mechanism by which we did this was something that the Treasury would consider in advance of the PBR. Exactly how they would do that was something that they would want to consider very carefully. What we were saying very clearly was that average losses would be offset, not just for future years, but for this year as well.

original source.

Briefing took place at 16:45 | Search for related news

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