Fierce criticism of Brown's tax reform continues

Friday, 18 April 2008 12:00 AM

The plans by prime minister Gordon Brown to abolish the 10p tax band are continuing to receive wide-spread criticism from Labour and opposition MPs.

A number of Labour MPs have criticised the move, claiming it would affect those on low income the most.

The Liberal Democrats have issued a similar warning, saying that up to five million people could be worse off because of the change.

In his final Budget while chancellor in 2007, Mr Brown cut the basic rate of income tax from 22 per cent to 20 per cent and increased a range of tax credits.

However, he also scrapped the lowest, introductory rate of income tax - ten per cent - a measure few took notice of at the time.

The changes came into force last weekend, but MPs still have the opportunity to vote against them.

Ex-minister and Labour MP Frank Field earlier tabled an amendment to the finance bill calling for compensation for those affected.

Speaking on the Today programme, Mr Fields said: "For two huge reasons this concern about the 10p is different from any other expression of disquiet from the backbenches.

"First of all we have never had a measure where we are actually being asked to vote through a package which makes five million of the poorest people worse off, who are doing exactly what the government has asked them to do and that is to work.

"Secondly, we are now in the second stage of this parliament and as a group, MPs, if they lose their jobs, are not very employable.

"Therefore it is not a matter that if we lost a general election we just go off and get other jobs. They know that the job market for them will be very tough indeed and that going over the cliff with a government that is doing something you believe to be fundamentally wrong is something I think more people will resist this time."

Mr Field concluded: "It is largely because it is attacking the poor but also their own positions will not look too good at a general election."

Liberal Democrats economic spokesperson Vince Cable warned today that the government's compensation measures were currently insufficient.

"There are probably about five million losers from this policy," Mr Cable said.

"These are people at the bottom end of the income scale when it comes below £18,000 a year."

"The government's view is that many of the people who are losers from it will be covered by the tax credit system," continued Mr Cable.

"The tax credit system is very complicated and there are a lot of administrative glitches in the system.

"Most people find they are overpaid and then have their money demanded back and so it is not quite the benefit that people believe it to be."

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