Straw 'sorry' over income tax changes

Monday, 28 April 2008 12:00 AM

Justice secretary Jack Straw has apologised to those worse off as a result of the abolition of the 10p income tax starting rate.

Speaking on BBC Radio 5 Live, he also reaffirmed that compensation for those disadvantaged by the changes would be backdated "as far as is conceivably possible".

When asked how people would manage before compensation is provided - by increased winter fuel allowance or tax credits - he said: "I'm sorry about that.

"That's the fact of the situation we are faced with. sometimes even with the best brains available to government there are inadvertent consequences of changes.

"We put our hands up. we should have known more about the impact of the abolition of the 10p rate."

Mr Straw went on to say: "Government is not perfect."

Citizens Advice has now demanded the chancellor ensure people affected by the removal of 10p tax rate be compensated quickly and effectively.

Katie Lane, Citizens Advice social policy officer, said: "Every year Citizens Advice bureaux provide advice on nearly 3.5 million problems relating to welfare benefit, tax credit, and debt.

"The effect of the removal of the 10p starting rate of income tax is therefore of great concern to us.

"While we welcome the government's recent commitment to compensate those who have lost out, it is vital that any measures can be introduced quickly, are backdated and are easy for people to receive. Any barriers, such as complex claiming procedures could cancel out any positive impact."

She also called for significant measures to dramatically increase the take-up of means tested benefits and tax credits by families in low paid work, and to improve the standards of service provided by the HM Revenues and Customs and the Department of Work and Pensions.

The abolition of the 10p tax rate hits some five million people, principally those earning under £18,000. It was proposed last year in Gordon Brown's final Budget as a means of funding a cut of 2p to the basic income tax rate to 20p.

Last week the government faced the threat of defeat from a backbench revolt over abolition of the 10p tax band - avoided when Mr Darling brought in last-minute proposals to compensate those losing out.

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