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Low-paid hit by tax changes - MPs Low-paid hit by tax changes - MPs
(about 2 hours later)
The decision to abolish the lowest income tax band penalises childless low-paid people, MPs have said.The decision to abolish the lowest income tax band penalises childless low-paid people, MPs have said.
The Treasury Select Committee said the "main losers" could lose out by as much as £232 a year.The Treasury Select Committee said the "main losers" could lose out by as much as £232 a year.
Committee chairman John McFall said they were an "unreasonable target" for the tax simplification measure.Committee chairman John McFall said they were an "unreasonable target" for the tax simplification measure.
Business Secretary John Hutton has said there will be no rethink on the 10p rate, despite unhappiness among some Labour MPs.Business Secretary John Hutton has said there will be no rethink on the 10p rate, despite unhappiness among some Labour MPs.
Standard income tax has been cut by 2% to 20% and tax credits increased, but the lowest 10p band has been scrapped entirely.Standard income tax has been cut by 2% to 20% and tax credits increased, but the lowest 10p band has been scrapped entirely.
'Laudable aim''Laudable aim'
In its report on the Budget, the treasury select committee concluded: "The group of main losers from the abolition of the 10p rate of income tax - those below the age of 65 with an income under £18,500 who are in childless households - seem an unreasonable target for raising additional tax revenues to fund the benefits of tax simplification and meeting the needs of children in poverty."In its report on the Budget, the treasury select committee concluded: "The group of main losers from the abolition of the 10p rate of income tax - those below the age of 65 with an income under £18,500 who are in childless households - seem an unreasonable target for raising additional tax revenues to fund the benefits of tax simplification and meeting the needs of children in poverty."
The Labour-dominated treasury select committee has launched a stinging attack to doubling the 10p rate George OsborneConservatives Treasury faces 'challenge'The Labour-dominated treasury select committee has launched a stinging attack to doubling the 10p rate George OsborneConservatives Treasury faces 'challenge'
It said those not entitled to tax credits or those who failed to claim them could lose up to £232 a year.It said those not entitled to tax credits or those who failed to claim them could lose up to £232 a year.
Labour MP Mr McFall added: "While tax simplification is a laudable aim, it seems strange that the abolition of the 10p starting rate of income tax disadvantages mainly low-income households."Labour MP Mr McFall added: "While tax simplification is a laudable aim, it seems strange that the abolition of the 10p starting rate of income tax disadvantages mainly low-income households."
He said "appropriate help" must be given to ensure they get the right benefits.He said "appropriate help" must be given to ensure they get the right benefits.
'Cheap stunt''Cheap stunt'
Last week, former Labour whip Greg Pope tabled a Commons motion calling for action, signed by 30 Labour MPs, which was withdrawn after he was "given assurances" by ministers they would examine its impact.Last week, former Labour whip Greg Pope tabled a Commons motion calling for action, signed by 30 Labour MPs, which was withdrawn after he was "given assurances" by ministers they would examine its impact.
On Sunday, Lib Dem leader Nick Clegg said the abolition of the 10p rate had been a "cheap political stunt" to allow Mr Brown to take 2p off the basic rate of income tax "for the following days headlines".On Sunday, Lib Dem leader Nick Clegg said the abolition of the 10p rate had been a "cheap political stunt" to allow Mr Brown to take 2p off the basic rate of income tax "for the following days headlines".
But Business Secretary John Hutton told the BBC he did not think it possible to go back on the decision, which he said had to be seen as part of a wider package of tax cuts.But Business Secretary John Hutton told the BBC he did not think it possible to go back on the decision, which he said had to be seen as part of a wider package of tax cuts.
He said the package had cut the main rate of income tax and which left families with children "significantly better off" while those who were left worse off would lose only "about 0.5% of net income".He said the package had cut the main rate of income tax and which left families with children "significantly better off" while those who were left worse off would lose only "about 0.5% of net income".
Speaking on BBC Radio 4's Westminster Hour, the Chairman of the Parliamentary Labour Party, Tony Lloyd, said he did not believe Labour backbenchers would vote against the Finance Bill, which confirms the tax changes.
"Labour MPs, in the end, are going to support the thrust of the government's policy because it's the government that will get them elected as Labour MPs," he said.
Commenting on the committee's report, shadow chancellor George Osborne said the change would "punish low income families and add to their already rising cost of living".Commenting on the committee's report, shadow chancellor George Osborne said the change would "punish low income families and add to their already rising cost of living".
He added: "Last week Gordon Brown was heckled at the rowdy Parliamentary Labour Party meeting about his doubling of the 10p tax rate, and 30 Labour MPs signed a motion against the rise.He added: "Last week Gordon Brown was heckled at the rowdy Parliamentary Labour Party meeting about his doubling of the 10p tax rate, and 30 Labour MPs signed a motion against the rise.
"Now the Labour-dominated treasury select committee has launched a stinging attack to doubling the 10p rate.""Now the Labour-dominated treasury select committee has launched a stinging attack to doubling the 10p rate."
The committee also warned that Chancellor Alistair Darling's forecast of economic growth in the next two years was "more optimistic than the consensus view".The committee also warned that Chancellor Alistair Darling's forecast of economic growth in the next two years was "more optimistic than the consensus view".
And it added: "The government's own forecasts show that it will be extremely tight as to whether, in future, it will meet the sustainable investment rule."And it added: "The government's own forecasts show that it will be extremely tight as to whether, in future, it will meet the sustainable investment rule."
It also had concerns about new rules which will require "non-domiciled" taxpayers resident in the UK to pay a £30,000 levy to retain non-dom status, which it said could hurt millions of relatively low paid foreign workers.It also had concerns about new rules which will require "non-domiciled" taxpayers resident in the UK to pay a £30,000 levy to retain non-dom status, which it said could hurt millions of relatively low paid foreign workers.