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10p tax solution

May 2008

The Answer

Brilliant David Taylor has the answer to the 10p tax disaster.

In an EDM tabled tonight, he maps out a targeted solution that would restore the loss to those in genuine need. The cost will be £650 million - a fleabite in Government spending terms.

Frank Field and the others who forced a climb-down want clear answers not the flannel and obfuscation that lost the seats of 300 Labour Councillors. Restoring the 10p in full is not an option because it would unfairly benefit the very well-off. The Taylor solution is a winner. Details in the Guradian tomoorow.

Grab it, Gordon.


Taylor, David
That this House warmly welcomes the Government's recently announced commitment to compensate those individuals who have lost out since 6th April 2008 because of the abolition of the 10 pence tax rate; is very concerned that the details of the plan so far available in relation to the mechanism for reimbursement suggest a risk that it could be incomplete, delayed and inaccurate; fears that the use of a mix of winter fuel allowance, tax credits, minimum wage and other changes to measures to reimburse all those who are adversely affected is unnecessarily confusing and prone to significant error and take-up problems; understands that there is a preferable method using the income tax system itself in a way not dissimilar to how pensioners get extra tax allowances; notes that a decision, for all adults under 65 years, to add an extra amount, capped at £1,200 of 50 per cent. of income over £5,200 to the 2008-09 personal allowance, and for this extra to be progressively withdrawn at the rate of £10 for every £100 of income over £7,600, should fully compensate those with incomes from £5,200 up to £19,600 adversely affected by the 10 pence rate abolition; believes this method has the benefits of speed, relative simplicity, being retrospective and fully and accurately reimbursing all those, and only those, who otherwise might lose up to £240 per year; commends this cost-effective scheme to the Government for consideration; and urges it to announce its conclusions on this issue well before the Pre-Budget Report 2008


A week ealier I asked the following question to the Chancellor:

Hansard reports


Paul Flynn (Newport, West) (Lab): There is money available—tens of billions—to fund the banks because of their own incompetence, and money was available, which will not be repaid, when we had an unplanned war against Iraq, so surely a Labour Government with a brilliant record of stealth socialism in their redistribution of wealth to the lower-paid for the past 10 years can find a mechanism to ensure that those who will lose out because of the abolition of the 10p tax rate will be compensated.

Mr. Darling: As my hon. Friend acknowledges, the Government have done a great deal for people during the past 10 years, particularly those on low incomes, and as I said yesterday, we will continue to do so. It is essential that we put in place the plan before us today because many people in this country, including those on modest incomes, depend on being able to get access to mortgages, and on mortgage payments being kept as low as possible.