Govt averts rebellion over 10p tax rate

Wednesday, 2 July 2008 9:52 AM

The government has managed to head off a Labour rebellion over the 10p tax rate but only after promises from chancellor Alistair Darling to return to the issue.

Labour rebels were pressuring the Treasury to do something for the estimated £1.1 million people were have not yet been fully compensated. They say the £2.7 billion compensation package assisted some people who were not even affected by the original change.

But finance secretary Jane Kennedy promised the chancellor would address the matter in his pre-Budget report after the summer.

Leading Labour rebel David Taylor decided against pushing forward with his amendment after that, but admitted he was taking it on a "huge amount of trust and goodwill".

Ms Kennedy said: "Yes there will be concrete proposals, yes they will address the point, they will be targeted, yes they will be implementable as soon as possible."

The finance bill, which enacts decisions made in the Budget, should pass the Commons today.

Still on the cards is a Labour revolt over car tax - an issue the Tories are fiercely opposing.

Up to 40 Labour MP could vote for a Conservative amendment to the bill, which would scrap plans to increase car taxes retrospectively. Most observers think they will probably fall in line, however.

MPs are currently debating the measures in the Commons. The vote should happen around 18:00 BST.

Tags:
• economy
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• economy and finance
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• income tax
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• taxation