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Minister defends income tax move Minister defends income tax move
(about 2 hours later)
A Treasury minister has defended the axing of the strting 10p income-tax rate - after 26 Labour MPs signed a motion saying it had been "damaging". A Treasury minister has defended the axing of the strting 10p income-tax rate - after 43 Labour MPs signed a motion saying it had been "damaging".
Jane Kennedy said while she understood "a lot" of Labour Party members were "puzzled" at the move, it was a way to redirect help to low-earning families.Jane Kennedy said while she understood "a lot" of Labour Party members were "puzzled" at the move, it was a way to redirect help to low-earning families.
When combined with all reforms since Labour came to power, "all families are better off", Ms Kennedy told the BBC.When combined with all reforms since Labour came to power, "all families are better off", Ms Kennedy told the BBC.
The measure comes into force when the new UK tax year begins this Sunday.The measure comes into force when the new UK tax year begins this Sunday.
It was announced in Gordon Brown's final Budget as chancellor, in March 2007.It was announced in Gordon Brown's final Budget as chancellor, in March 2007.
He decided to reduce the basic rate of income tax from 22% to 20% at the same time as scrapping the lower 10% rate.He decided to reduce the basic rate of income tax from 22% to 20% at the same time as scrapping the lower 10% rate.
At prime minister's questions on Wednesday, William Hague, the shadow foreign secretary, warned that five million low-income households would be worse off as a result of the changes.At prime minister's questions on Wednesday, William Hague, the shadow foreign secretary, warned that five million low-income households would be worse off as a result of the changes.
A number of former ministers are among the 26 MPs to call on the current chancellor, Alistair Darling, to "correct this damaging change to the taxation system". A number of former ministers are among the 43 MPs to call on the current chancellor, Alistair Darling, to "correct this damaging change to the taxation system".
'Increased tax credits''Increased tax credits'
"We do understand the concern," Ms Kennedy told BBC Radio 4's The World at One."We do understand the concern," Ms Kennedy told BBC Radio 4's The World at One.
"That's why so many Labour backbenchers are saying, 'How is it that we're doing this,' and, 'What are the reasons for doing it?'"That's why so many Labour backbenchers are saying, 'How is it that we're doing this,' and, 'What are the reasons for doing it?'
The lowest fifth of taxpayers are around 12% better off because of all the reforms that were made since 1997 Jane Kennedy, Treasury minister
"That's why it's important that I explain what the reasoning was behind the overall tax package.""That's why it's important that I explain what the reasoning was behind the overall tax package."
She said even those who "lose out" because of this change "will have found that on average they are £505 a year, or £9.70 a week, better off overall, as a result of all of the changes that we've introduced since 1997".She said even those who "lose out" because of this change "will have found that on average they are £505 a year, or £9.70 a week, better off overall, as a result of all of the changes that we've introduced since 1997".
The lowest fifth of taxpayers are around 12% better off because of all the reforms that were made since 1997 Jane Kennedy, Treasury minister
People "will see that their weekly income is being affected by a number of things", she said.People "will see that their weekly income is being affected by a number of things", she said.
"They will see that their tax credits will be increasing, particularly families with children are some of the biggest gainers as a result of the overall package.""They will see that their tax credits will be increasing, particularly families with children are some of the biggest gainers as a result of the overall package."
And Ms Kennedy added: "The lowest fifth of taxpayers are around 12% better off because of all the reforms that were made since 1997."And Ms Kennedy added: "The lowest fifth of taxpayers are around 12% better off because of all the reforms that were made since 1997."
She said the government would be ensuring the available resources would go "to the people who need them the most".She said the government would be ensuring the available resources would go "to the people who need them the most".
Shadow chancellor George Osborne claimed there was "an open tax revolt in the Labour Party" which showed the government was "in disarray as a serious economic crisis looms".
"Dozens of Labour backbenchers are publicly attacking the prime minister for the effect of the abolition of the 10p tax rate on the poorest," he added.
"Gordon Brown's tax policy is falling apart."