Abolition of 10p Tax Rate

12.00.00am UTC (GMT +0000) Thu 8th May 2008

Sarah Di Caprio comments on the detrimental effect the tax change is already having on lower earners.

"As a result of the Budget those unable to claim tax credits or Pension Credit and earning less than £18,500 are now seeing their income tax bill rise. These are those low earners who do not earn enough to gain from the 2p cut in standard rate Income Tax.

"Under the Budget changes, five million low earners will be hit. In Waverley these include low paid couples or single people who do not have access to Child Tax Credit, and older women in the 60-65 age bracket whose pensions or salaries will be taxed at a higher rate. Carers, who are only allowed to work 14 hours a week to claim Carer's Benefit, are affected in very large numbers. The Government claims that the losses for families will be offset by tax credits, but these are complicated, means tested benefits which have sucked many into the bureaucratic nightmare of overpayments and underpayments.

"The Liberal Democrats questioned and opposed the tax changes when they were proposed a year ago. It has taken back bench Labour MPs a whole year to complete their U-turn on this issue. Despite their more recent protestations every single Labour MP who has signed David Chaytor's well-publicised Early Day Motion failed to vote against the abolition of the 10p tax rate on 18th March this year. My Liberal Democrat colleagues in Parliament voted against this again on 28th April. Unfortunately, too many of the Labour back bench rebels did not ultimately join us in the lobbies and the clause was passed."