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Low-paid hit by tax changes - MPs | Low-paid hit by tax changes - MPs |
(about 8 hours later) | |
The decision to abolish the lowest income tax band penalises childless people in low-paid jobs, MPs have said. | |
The Treasury Select Committee warned the "main losers" could be deprived of as much as £232 a year. | |
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 backbenchers. | |
Standard income tax has been cut from 22% 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 committee said households without children or anyone over the age of 65, and on incomes of under £18,500 a year, would lose out. | |
They seemed 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' |
Mr McFall, a Labour MP, 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 and called the report a "sober analysis" which had "reminded the government of its responsibilities". | |
Last week, former Labour whip Greg Pope tabled a Commons motion calling for action, signed by 30 Labour MP. | |
This was withdrawn after he was "given assurances" by ministers they would examine its impact. | |
'Cheap stunt' | 'Cheap stunt' |
class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYNew Labour's vicious tax policies have increased the burden on the poorest among usSteve, Sunderland class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=4591">Send us your comments | |
For the Conservatives, shadow chancellor George Osborne said the income-tax change would "punish low-income families and add to their already rising cost of living". | |
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 day's headlines". | |
But Business Secretary John Hutton told the BBC he did not think it possible to go back on the decision, which had to be seen as part of a wider package of tax cuts. | |
He said the government had cut the main rate of income tax, leaving families with children "significantly better off", while those who were left worse off would lose only "about 0.5% of net income". | |
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. | "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. |
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". |
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. | |