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."

HOW THE 10p RATE WORKED

  • 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
    +1

    Comment number 66.

    Ridiculous. Earnings up to the equivalent of a full time job at the minimum wage should not be taxed at all because that is a MINIMUM wage. For earning above that level I don't see why a 20% tax should not be applied.

  • rate this
    0

    Comment number 65.

    Yeah right Ed, or is it David ( who cares ) we believe you......and I'm sure you meant to say there'll be no more new taxes, or an increase in VAT, or that you won't sell off the rest of the family silver ( gold ) and that you'll personally close all the loopholes that allow business to pay no tax.

  • rate this
    0

    Comment number 64.

    Labour and the bankers wrecked the country, then the Tories made it even worst, no wonder Scotland wants out.

  • rate this
    +1

    Comment number 63.

    Another new tax, which just like the 10% temporary income tax introduced in 1910 would definitely not suffer from function creep.

    I bet the rate will increase and the threshold will drop, until a two bed flat in the suburbs is deemed a 'mansion'. Govt spending will creep up to swallow the proceeds, the country would be deeper in debt, and the only solution will be to find something else to tax.

  • rate this
    +2

    Comment number 62.

    Promises about cutting income tax rates are hollow and misleading. National Insurance is effectively another income tax and whenever we get a headline income tax cut, NI rises. The basic rate of tax might look as though it is only 20%, but every 'basic rate' tax payer in this country actually pays 32% to the Treasury because NI takes another 12%!!!!!

    Will there ever be real honesty in politics?

  • rate this
    +2

    Comment number 61.

    I'll vote for the party who...

    1) Closes all tax loopholes
    2) Keep the NHS in public hands
    3) Nationalise the energy companies
    4) Stop illegal immigrants
    5) Prosecute the bankers who contributed to the financial crisis and libor etc.
    6) Decrease foreign aid until we sort ourselves on. A foundation must be strong before we help someone else.
    7) Invest in infrastructure.

    I tend to like Tories.

  • rate this
    +18

    Comment number 60.

    3. mkpaul
    Simplest mansion tax would be a revaluation of Council Tax bands. At present, folk in bands A, B, C and D are heavily subsidising those in marble stately homes.
    _____
    They don't even have to revalue them, just add in Bands I, J, K .....
    It really isn't difficult

  • rate this
    0

    Comment number 59.

    A step in the right direction IF Labour get back into power and IF Labour keep their promises. That's two pretty big IFs. I would like to see detail as to how the 'Mansion Tax' is going to be implemented and enforced.

  • rate this
    +4

    Comment number 58.

    21.Maths42
    Here here, there should be 1 tax percentage and everyone who earns a wage should pay it not matter how high or low you wage. Far better to get everyone in the country to pay the same than 1/2 of them paying nothing

  • rate this
    0

    Comment number 57.

    We need a vision that is different to the horrors being thrown onto the working classes by this pathetic Tory government. This government is in it to enrich the millionaires. We need to enrich the others to get the economy moving. It seems to me Labour are the only voice for the working classes.

  • rate this
    +2

    Comment number 56.

    Who is in charge of Ed Milibands hands.

  • rate this
    +4

    Comment number 55.

    Its not possible to take labour seriously when they made such a mess of the economy. Unfortunately for the Tories when they come to power they spend the first 5 years fixing the mess left by every labour govt -thats why they seem to be the nasty party, because they have to take tough decisions. labour left us broke in 2010 just as they did in the 70s when Healey had to go to the IMF Greece style!

  • rate this
    0

    Comment number 54.

    Could I just ask....is anyone actually considering voting Tory or Labour again?

  • rate this
    +1

    Comment number 53.

    Ed Milliband or Robin Hood ?

    Seriously, does he ever have any ideas of his own?

  • rate this
    +4

    Comment number 52.

    At times like this I despair of our political class, be they left or right. We face unprecedented upheavals in our societies: technologically and economically. The developed world will have to face up to a future with diminishing living standards and significantly less consumption but the best our politicians can come up with is more of the same. The planet cannot support infinite economic growth.

  • rate this
    +1

    Comment number 51.

    Yet another Milliballs sound bite to gain populist support for the opinion polls.

  • rate this
    +74

    Comment number 50.

    Plenty of people think the Coalition should be thrown out of office tomorrow for doing a bad job.

    And whilst it true that they are not doing that well, just think back 3 years ago to the bunch of clowns that got the country in the mess it's in now. And some people want to go back to that ? Replacing Blair and Brown with Milliband and Balls ? Are they serious ?

  • rate this
    +82

    Comment number 49.

    You wouldnt give alcohol to an alcoholic ?
    You wouldnt trust your money to a dodgy door to door salesman ?
    You wouldnt trust a banker ?

    So why on earth would you ever trust the labour party. I agree all politicians are bad but these almost guys bankrupted this country twice, 70's and now more recently.

    We need new policies that actually make sense for the country.

  • rate this
    +101

    Comment number 48.

    Beware of politicians bearing tax reductions!

    This country is skint. We are deeply in debt. This is a result of decades of political mismanagement as politicians attempt to bribe voters with cheap promises.
    Debts must be repaid.
    I will vote for whoever explains clearly and honestly how they are going to get us out of debt with minimal impact on our standards of living. A 10p rate won't do it.

  • rate this
    +3

    Comment number 47.

    More Liebour trash

    Liebour lazily created the attrociously unsustainable working tax credits because they FAILED to improve UK economy to provide jobs with a proper living wage, so to cover their ATTROCIOUS failure they force taxpayers to subsidise wages

    I am more bothered about bedroom tax, is Liebour going to REVERSE it, as you can work 30 years, lose job & now overnight lose your home

 

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