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April 21, 2008
10 per cent tax axe
First I'll admit to being as annoyed by the scrapping of the 10% tax band as most, but the question that keeps springing to mind is why anyone is surprised.
Even David Cameron doesn't seem to understand what is going on.
BBC - Cameron vow to 'stop' tax changes"For a good headline, for one day's newspapers, he was prepared to attack some of the lowest paid people in our country," said Mr Cameron.
Now maybe I'm too cynical, but I always thought the 10p band would be axed at some point. After all, it was introduced by Brown as part of his last Budget as Chancellor, before his uncontested coronation as Prime Minister and Party Leader. I suspect the intention even then was for Brown to hold a snap election once Blair stood down. With that in mind, what better way to boost your public standing than a high profile lower tax band of 10p. The only problem being that such a band was unsustainable in the longer term, given the Government's spending commitments.
Even that wasn't necessarily a problem, as it is unlikely that Brown ever saw being Prime Minister as a long term job; the lure of riches from the private sector most likely proving to be a strong a lure to Brown as they were to Blair. So the simple, election winning plan was for Brown to introduce the 10p tax band, call the snap election, win a 5 year term and then hang his Chancellor out to dry when the band was scrapped.
Unfortunately for Brown, he bottled it and didn't call the election as originally planned. So all the potential goodwill he bought with the 10p band came to nothing. At the end of the day, Brown has had Darling return the poorer off to the status quo ante bellum (in a manner of speaking).
So just remember, the 10p band was a squandered election winner, never intended to be a long-term benefit for poorer tax payers. And Darling was always supposed to be Brown's bitch.
Posted by Clive on April 21, 2008 12:51 PM in the category Labour
Comments
Dear Clive
I'm wondering if there isn't some confusion here. The 10p tax rate was announced in 1999
http://news.bbc.co.uk/1/hi/events/budget_99/budget_briefing/279752.stm
Its abolition was announced by Brown in his last budget. He failed to leave instructs with Treasury officials to make sure no one on low incomes lost out from the move. Those 5.3 million people are the ones for whom a 2p cut in the standard rate of income tax is no use, because they don't earn enough.
His successor as CHX is going to have to come up with a very convincing story today of how compensation is going to made and quickly.
Posted by: Peter Kenyon at April 22, 2008 11:35 AM
His successor as CHX is going to have to come up with a very convincing story today of how compensation is going to made and quickly.....
....and he did!
Posted by: Peter kenyon at April 23, 2008 3:49 PM
Hi Peter, there was indeed some confusion. It was the 2p cut to 20p that was announced at the same time as the abolition of the 10p band, wasn't it. I still stand by my opinion that the tax changes were made with an eye on a snap election, but as you point out, the removal of the 10p band was rather bodged.
Posted by: Clive at April 23, 2008 7:41 PM
Dear Clive
No doubt there. The poor boy is still in denial, as evidenced by a BBC interview this morning.
http://news.bbc.co.uk/1/hi/uk_politics/7374860.stm
However, he added: "We made two mistakes. We didn't cover as well as we should that group of low-paid workers who don't get the working tax credits and we weren't able to help the 60 to 64-year-olds who didn't get the pensioner's tax allowance."
Mr Brown also said: "The problem was quite specific... We had dealt with this very, very major tax reform. We hadn't done enough for these two smaller groups."
two smaller groups = 5.3 million people!
Get real, Gordon.
The only consolation is the headline - Gordon admits mistakes!
Peter
Posted by: Peter Kenyon at April 30, 2008 10:00 AM