Brown firm amid tax rebellion

More than five million low earners will be hit by cut

Tuesday, 08, Apr 2008 12:00

Government ministers have moved to defend the abolition of the 10p tax rate as Gordon Brown refuses to concede a U-turn that could stave off a Labour rebellion.

Backbench MPs are concerned that the abolition of the 10p tax bracket will adversely affect 5.3 million low earners.

Criticisms of the tax cut, announced in last year's Budget to pay for a 2p cut in the basic rate of income tax were increased yesterday when a Treasury select committee report said low earners were an "unacceptable target" for revenue-raising.

In a round of media appearances designed to stave off further criticisms, loyal Brownite Ed Miliband admitted the adverse impact on low earners was a "matter of regret".

But speaking to Radio 4, he maintained the government's line that low-earning families will be better off overall as a result of Labour's reforms.

Mr Miliband said: "When you make a big set of changes in the tax system, some people do lose out. That is a matter of regret. Of course it is. But overall these changes make the tax system fairer."

The Conservatives have now joined Labour rebels in attacking the tax cut and David Cameron has urged backbench MPs to vote with him in an attempt to reverse the cut.

But Jane Kennedy, financial secretary to the Treasury, said it was unlikely Mr Brown would admit defeat.

Speaking to BBC's Newsnight she said: "I cannot see us reversing this tax change at all. I think it is an important package and it is a very important integral part of the tax changes.

"We obviously keep all taxes under review and as the tax minister I am the least popular minister in the government, but I can assure you that we work very hard to make sure people are compensated as a result of the changes we make."

Forced to justify the cut in person, Mr Brown said he had tried to ensure millions of people had been better off as a result of his final Budget.

Speaking to Sky News he said he would not make false and un-costed promises to reverse the tax cut.