3bn Tax Giveaway Launches Browns Fightback (from The Herald )

HEADLINE NEWS - IN THIS SECTION		INDEX

£3bn tax giveaway launches Brown’s fightback

MICHAEL SETTLE

May 14 2008

Comment | Read Comments (85)

Gordon Brown's fightback began in earnest last night after he unexpectedly unveiled a £120 tax cut for 22 million people which delighted Labour MPs but left Conservative opponents accusing him of a "cynical" bribe before a by-election.

Today, the Prime Minister, so beleaguered of late with a spate of critical memoirs and Labour's worst-ever poll rating, will attempt to revive his fortunes further with the publication of a draft Queen's Speech, which will set out the UK Government's legislative plans for the next year.

Alistair Darling's £2.7bn compensation package means that, from September, people on low and middle incomes will benefit from a one-off £120 tax break.

It will be backdated to April 6. People will receive a £60 payment in September and thereafter £10 monthly payments for the rest of the financial year.

The threshold for the upper 40% rate of income tax will be cut from £41,435 to £40,835, so that those earning above this level will see no change in their take-home pay. Some 150,000 people will be moved into the upper band as a result.

The £2.7bn will come from extra borrowing but Treasury officials declined to say whether or not it would breach the Chancellor's golden rule. The LibDems noted how it would lift net government borrowing to £45.7bn - a 6% rise from what was predicted in the Budget two months ago and 50% up on last year's estimate.

Frank Field, the Labour back bencher who led the 10p tax rebellion, declared that the compensation package should "put an end to the issue". He also apologised "without reservation" to Mr Brown for his recent personal attacks against the PM.

Trade union leaders warmly welcomed the tax break. Grahame Smith of the STUC said the UK Government "should be commended for listening to the very widespread concern over the removal of the 10p tax".

Mr Darling told MPs that raising individual tax allowances for this year by £600 was the "fairest and most effective way" to help those who lost out. But his Tory shadow, George Osborne, said: "Let no-one be fooled why you are making this statement - not because you wanted to but because this divided, dithering and disintegrating government are panicking in the face of the Crewe and Nantwich by-election."

Vince Cable for the LibDems said the government's tax policy had "descended into a complete farce". More than £2bn of the extra money would go to people untouched by the 10p tax change while those worst-affected would not be compensated in full, he said.

The Chancellor explained that of the 5.3 million people who lost out over the 10p tax abolition, 4.2 million or 80%, would be fully compensated while the remaining 20% would be compensated for at least half of their losses. In addition, some 600,000 low income people would be taken out of tax altogether.

There was an added bonus for concerned Labour back benchers in the compensation package because the changes will mean that 17.8 million additional basic rate taxpayers - anyone earning up to £40,835 - will gain the £120 tax cut.

In their post-statement analysis, the Tories claimed that, among the 1.1million who would not be fully compensated, were those paid the least: people earning between £6635 and £13,355.

Mr Osborne said this amounted to an annual loss of £112. He told The Herald the effect would be "disproportionately worse in Scotland" where there were more people on low incomes.

Add Comment

Posted by: Wardog, Buckie on 10:27pm Tue 13 May 08

Capability Brown: Raider of the Lost Ark

Capability Brown, the man who said there were no losers in his Budget
Now forced to admit there were millions of losers

Capability Brown, the man who said he wouldn't rewrite his Budget
Now 'ghost' rewriting the Budget he gave in 2007

Capability Brown, who said that in-year payments were impossible
Now doing a full U- Turn under political pressure into making in-year payments

The additional 'help' is for one year only, a tax bribe that still leaves 1.1 Million of the Lowest paid workers worse off with the other 4.1 Million of the Lower decile paying the same tax whilst those on �18500-�40000 pay less tax, with some being up to �500 better off as a result of this unprecedented budget fix.

This is borrowed money, unsustainable beyond this tax year.

A one-off payment, a one-off solution to tax rises that hit EVERY year

No one is fooled about why the Chancellor is making this statement today

He's panicking in the face of the Crewe and Nantwich by-election, knowing full well that a Tory victory will spell the end of his premiership...... today's move is nothing short of a gamble with the UK's debt.

Can anyone take Capability Brown seriously anymore after this as yet unsorted fiasco, the utter incompetence, faux socialist ideals and pandering to the middle classes is a lesson on what Labour have become.

".....I don't recall all the sermons my father preached Sunday after Sunday.

But I will never forget these words he left me with:

"we must be givers as well as getters".

Put something back.

And by doing so make a difference.

And this is my moral compass.

This is who I am.

I am a conviction politician.

Capability Brown
Crowned Prime Minister without Election
Labour Conference 2007