Ed Miliband backs 'mansion tax' to fund 10p tax rate return


Ed Miliband : "Labour is on the side of working people "

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A Labour government would seek to re-introduce the 10p starting rate of tax scrapped by Gordon Brown in 2008, Ed Miliband has announced in a speech.

Mr Miliband said it was a "very bad mistake" to get rid of it and the move would send a "clear signal" his party was on the "side of working people".

The move, worth about £2 a week for people, would be funded by a "mansion tax" on £2m properties, he said.

But No 10 said it was a "stunning admission of economic incompetence".

The decision to scrap the 10p tax band - announced in the 2007 Budget as part of a package which also saw the basic rate of tax reduced from 22p to 20p - was highly controversial.

Despite measures to compensate those affected, critics said up to 500,000 people were left worse off.

Mr Miliband said the move was "wrong" as the 10p tax rate made a difference to people on low incomes and increased incentives to work.

He said he was "determined to put it right" by reinstating the 10p rate after the next election and urged the government to consider doing it at next month's Budget, describing it as the "progressive choice".

'Fairer taxes'

"We would put right a mistake made by Gordon Brown and the last Labour government," he said.

"We would use the money raised by a mansion tax to reintroduce a lower 10 pence starting rate of tax, with the size of the band depending on the amount raised. This would benefit 25 million basic rate taxpayers."


  • Most people have a chunk of their income which is tax free - known as the personal allowance, In 2007, this was worth £5,225 and has since risen to £8,105.
  • Before April 2008, everyone paid 10p on the next £2,230 of their income, only rising to 22p above this level.
  • But after the 10p tax band was axed, everyone paid 20p on their earnings above the personal allowance until they hit the higher rate 40% band
  • In 2012-3, the 20% rate applies to the first £34,370 of income above the personal allowance

Labour has previously indicated it would only set out tax and spending commitments in the run-up to the next election - scheduled in 2015 - and Mr Miliband made it clear that he would not commit to put any specific policies in its manifesto at this stage.

But Mr Miliband said the 10p pledge would send a clear message about Labour's commitment "to a fairer tax system and improving the living standards of working people" as well as showing the party is "moving on from the past".

Shadow chancellor Ed Balls said both he and Ed Miliband had raised objections to the 10p move when they were members of the cabinet at the time.

Asked on the Daily Politics whether it was a firm manifesto commitment, Mr Balls said they could not write their manifesto now, but the changes were something "we want to do... intend to do... plan to do" if the party gets into power after the next election.

The idea of a mansion tax was first proposed by the Lib Dems before the last election although the Conservatives oppose the move and the policy was not adopted by the coalition government.

Mr Balls said there were about 70,000 homes currently worth more than £2m - half of which were second homes - and a tax could raise an estimated £2bn.

He said the detail "had to be got right" but he would be willing to talk to the Lib Dems who he suggested were "still keen" on the idea.

In the speech, Mr Miliband also repeated his support for a temporary cut in VAT to boost economic growth - and called for action on train fares, "unfair" bank charges and capping interest on payday loans.

'Never so good'

Criticising the government's economic policy as a "race to the bottom in wages and skills", he accused the Conservatives and Lib Dems of rewarding those at the top while "squeezing" everyone else.

Speaking in Bedford, where in 1957 Conservative Prime Minister Harold Macmillan famously said Britons had "never had it so good", the Labour leader said that falling wages and rising prices mean many now feel "they will never have it so good again".

Danny Alexander MP: "Strong case for an additional levy on the highest level properties"

"People in Britain are putting in the hours - doing the shifts - as never before. But something has changed in the last few years.

"There's less chance of promotion, less chance of a pay rise, and at the same time, prices just go up and up and up: petrol for the car, tickets for the train, childcare for the kids, deposits for a first home.

"The 'squeezed middle' has never been so squeezed - and it looks like it will be that for years to come."

He criticised the government's decision to scrap the 50p tax rate for those earning over £150,000 from April 2013, saying "we can't succeed as a country just by hoping wealth will trickle down from those at the top to everyone else".

'Labour's mess'

A Downing Street spokesman said Labour's change of tack on the 10p rate was "a stunning admission of economic incompetence" and the coalition had helped low earners by substantially increasing the personal allowance - the level at which people start to pay tax - to £9,205 in April.

"The losers from Labour's 10p tax fiasco have become winners under this government," he said.

He also warned that a mansion tax "would mean government snoopers in every home to revalue your house for council tax, meaning council tax rises for anyone who's improved their home in the past 20 years".

Lib Dem Treasury Secretary Danny Alexander said Labour were "late to the party" on the need to reduce the tax burden on the lowest paid.

"After thirteen years in government, the only action Ed Balls took was to raise the amount of tax those on low incomes paid by abolishing the 10p rate. It was the biggest tax mistake they ever made and it has taken them until now to realise their error."


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  • rate this

    Comment number 26.

    The problem isn't just the tories. It's successive governments caving into the wishes of big business, all on the back of a media posturing 2 party political system. Milliband even supported Brown in scrapping the 10p rate. He must think I was born yesterday!

  • rate this

    Comment number 25.

    Why did Gordo cancel the 10p rate and why is Millibandwagon looking at restoring it?

    What this country needs is stability, short term bribes to the electorate are what messed up the economy. Labour bribed the low earners, the Tories are bribing the wealthy.

  • rate this

    Comment number 24.

    More BS from one of GB's henchmen. Watched him yesterday on PMQ's "a rabbit in the headlights" DC annihilated him, he is hopeless nothing new same old diatribe trash. No ideas, no sense to what he says - hopeless. Watched one of his mentors last night a certain Jon Cr----s one of TB's advisors - Labour have no hope at the next election-same old bash the rich rubbish and tell porkies to supporters

  • rate this

    Comment number 23.

    Just what we need. Add to the cost of administering the tax system. Just increase the threshold of paying tax to the point where you earn a living wage.

    Job done.

  • rate this

    Comment number 22.

    I see we are blaming it all on Gordon again....weren't those 2 jokers (Ed & Ed) the economic genius's sat right alongside him?

    They are laughable....no credibility, no ideas, no answers....the real tragedy is that they might just get back in and ruin us all....AGAIN.

  • rate this

    Comment number 21.

    A "fair" tax policy to me is where everyone pays the same percentage.

  • rate this

    Comment number 20.

    With Labour it's not what you can see it's what you can't. Here is the party of stealth taxation

  • rate this

    Comment number 19.

    Can somebody explain to me why 9 or 10% of everything you earn regardless of the amount would not be a fair tax ?

  • rate this

    Comment number 18.

    Mansion Tax is unworkable and 10p band is unnecessary & overcomplicating a system left simple in 1997 and screwed up by Brown et al.
    Labour should never be trusted on the economy not just because of the last lot but from MacDonald, thro' Attlee , Wilson , Callaghan , Healy they always get it wrong.
    Can't be trusted on anything else either - Pensions, gold , Immigration , EU, Employment Law......

  • rate this

    Comment number 17.

    well i for one would rather labour get in as opposed to the jackasses who are in now!!!!!!!!!!! if overspends were made in the past it was for the benefit of the ordinary man on the street eg new hospitals,new schools etc

  • rate this

    Comment number 16.

    Is that it ? All talk no substance!

  • rate this

    Comment number 15.

    Why does this announcement make me think of the wheels falling off a clowns car while smoke wildly billows out of the back of it?

  • rate this

    Comment number 14.

    I usually defend the BBC but where is their editorial eye when they decide to cut out the following Q & A session of a potential PM.

    Instead we had the presenter waffle on about the speech we've just seen then they covered a celebrity story in S.Africa that affects relatively few.

    Idiotic decision and I have complained on 03700 100 222

  • rate this

    Comment number 13.

    It's time that policy pledges and manifesto promises were made binding in law. Then I might take Mr Millibean seriously. Otherwise his good ideas are meaningless.

  • rate this

    Comment number 12.

    Great Labour vision Millibland, mostly his speech lauded Victorian era working pay and practice, so back to very long days and 'satanic' mills then!

    10p tax rate? Past idea they broke the promise of. Far better as now by the Cons to increase the 0p band.

    Mansion tax, cynical ploy to buy the partnership of the LibDims, morally corrupt taxing any asset for mere ownership.

    Same old Labour rotten.

  • rate this

    Comment number 11.

    Too little too late this horse has bolted the Labour stables and won't be back. None of the other political parties are any better mind so next time around its none of the above.

  • rate this

    Comment number 10.

    I'm sure what we really want to see huge reductions in our extortionate bills and living costs. Sort that out and I'm sure we will all vote for you, until then you can keep your 10p...

  • rate this

    Comment number 9.

    Ed Miliband for Prime Minister? No thanks. It's took them two and a half years to actually come up with a policy, and it's an old policy (so, a U-Turn).

    When they introduced the 50p tax rate, the rich people brought forward their earnings so they only had to pay 40p per £ just before it kicked in.

    Labour need a reality check.

  • rate this

    Comment number 8.

    Written by the unions, delivered by Miliband.

  • rate this

    Comment number 7.

    Acts of a desperate man grabbing at straws, your party crippled this country. I would not trust this man to cross the road let alone run the country.


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