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Loughborough MP welcomes Chancellors Statement
Posted on 27/04/2008
Loughborough Andy Reed MP has welcomed further clarification from the Chancellor about action being promised to tackle the issue of those groups affected by the change in the 10p tax rate.
The Loughborough MP had met with Chancellor Alistair Darling earlier in the week on Tuesday 22nd April 2008 to discuss the abolition of the 10p starting rate of tax to pass on concerns from his Loughborough constituents.
Andy said "In meeting with Ministers and the Chancellor this week I had signalled that I could no longer support the Budget unless action was taken to redress the issue of the poorest households who lost out over the 10p tax rate change. I made it clear that I needed to see promised action. In the meetings over the last few weeks and certainly this week Gordon, Alistair and other Ministers have certainly taken on board just how serious this matter is and I now think have acted in the right way. I think they now accept that the unintended consequences of the change do adversely affect groups - like those without children earning under £18,500 and early retiree pensioners 60-64. Other groups like the poorest pensioners are better off because of the change in their tax allowances which have lifted 600,000 pensioners from paying tax at all."
"Some of us highlighted this potential problem last year and we hoped that a package would have come forward sooner. It is a disappointment that 10 years of hard work on tackling poverty in this country left by the Tories is now dismissed because of this headline change. The fact remains that this Labour government through the minimum wage, tax credits, tax changes and child benefit has done more to tackle household poverty than any other in recent history. Even the Budget which changed the 10p rate was according to the Independent IFS a good budget for poor families and poor pensioners. If the Chancellor and the Prime Minister acknowledge there was an mistake in not having the corresponding compensation for these two groups and they will rectify these I can support their action to continue tackling poverty."
The Chancellor, Alistair Darling has set out plans for the immediate compensation for workers and pensions in a letter addressed to the Treasury Select Committee. Meeting a request of financial help for those affected by back dating to start of the current financial year.
Previously, ministers had stated that any financial compensation would not come until next financial year.
The 10p tax rate was abolished by Mr Brown in his last Budget as Chancellor last March but the change only took effect from this month - the beginning of this financial year.
Anyone without children who earns less than £19,000 a year now pays more tax and pensions between 60 and 64 years old will receive bigger winter fuel payments.
It is possible that low earning childless workers could receive higher tax credits to cover their increased tax bills.
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