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
    +4

    Comment number 266.

    "64. l j s
    Labour and the bankers wrecked the country, then the Tories made it even worst, no wonder Scotland wants out."

    Right... because our last prime minister wasn't Scottish.

  • rate this
    +2

    Comment number 265.

    201. Some Lingering Fog
    What is better, a £10,000 tax free allowance then a 10p tax rate for the next £2,000 then 20p after that or a £11,000 tax free allowance then a 20p tax rate?"

    £11k allowance then 20p tax - obviously. Over 12k or under 10k they're the same, but if you earn £10-12k, Labour's way will hit you with more tax than the Conservative way

  • rate this
    +6

    Comment number 264.

    "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 that doing so earlier would not be sensible."

    Indeed.
    That they announce it now seems like a bit of media distraction from an otherwise vapid Labour news month, whilst affording themselves enough time to retract it later on.

  • rate this
    +3

    Comment number 263.

    Re 239.Nervous
    Why should millionaires get a tax break, ………….working 40 to 50 hours a week to make ends meet.
    -Can you please point me at the reality where rich people are rich from being lazy? The words cloud, cukoo and land spring to mind.



    Certainly Cameron is worth a fortune and never done a day’s work in his life

  • rate this
    0

    Comment number 262.

    Not exactly a ground breaking suggestion. Likely to be subsumed by gvt policy by if not before the next GE.

  • rate this
    +4

    Comment number 261.

    All I know is that we need to encourage as many people as possible into work. It is great for the economy, more fair for society and cuts out a lot of issues with being unemployed - e.g. crime & some illnesses.

  • rate this
    +1

    Comment number 260.

    nothing wrong in lowering any tax any time. But, to cover the Exchequer cost of the 10p rate by taxing 'mansion's, you 'd have to tax all £2m houses by £35m to raise the amount.
    Then again, what do you expect from someone of Marxist origin, deliberate stoking of class hatred, breathtakingly unoriginal and weak

  • rate this
    0

    Comment number 259.

    Two heads may be better than one but but these two Eds are worse than none

  • rate this
    +8

    Comment number 258.

    I am not a huge fan of the conservative party. I belive in the free market but do not like their outdaded views on other issues. However I could never trust Labour again. They squandered all our money in the boom years. Every week a new 'tax credit' or benefit was created to make people dependant on the state and encourage them to vote labour. Labour can not be trusted.

  • rate this
    +2

    Comment number 257.

    The last 10p band was a fiasco as it cuased a higher marginal rate of tax for many people - plus, this "politics of envy" on behalf of Labour and the "politics of the undesreving poor" of the Tories is just one reason why people are fed up with the self-serving idiots.

  • rate this
    +7

    Comment number 256.

    Vote Labour and you'll see UK go bankrupt for sure. We owe over a trillion £ and goverment is still borrowing more - to prop up the NHS and our benefits system.

    My children are going to suffer for this - I would like to see the politicians who approved this reckless borrowing strung up.

  • rate this
    +2

    Comment number 255.

    Under labour - immigration mistakes, NHS mistakes and now the tax rate mistakes.

    Are we sure these people could run the country? The only vision they have is the 'hind' variety.

    I despair at the choice for this country - the lot we've got in or the lot waiting in the wings. Some long lean times ahead for the vast majority I'm afraid

  • rate this
    -4

    Comment number 254.

    I'd just like to say despite the carping grudges on here, the serious damage to our country has never been done by the Labour party. Say what you like about Gordon Brown, the NHS was always safe in his hands unlike the present bunch of unelected thieves. I know where my vote will go when I get a choice.

  • rate this
    0

    Comment number 253.

    Let us NEVER forget that the Coalition actually inherited an economy in its 3rd Quarter of GROWTH - small yes but GROWTH.

    Since 2010 Gideon and his Tory Chums with LD colusion have engineered 2 RECESSIONS and are well on their way to a THIRD recession courtesy of a so called "austerity" programme.

    Despite Cameron's lies those measures have seen DEBT increase and the DEFICIT increase

  • rate this
    -2

    Comment number 252.

    Oh good so now we'd have a four rate tax system to administer (six if you count dividend rates) instead of three. Typical Labour - over-complicate the tax system for zero economic benefit. Scrapping the so called 10p rate has been more than balanced by the massive increase in personal allowances enjoyed in the last 4 years. Why fix what isn't broken?

  • rate this
    +1

    Comment number 251.

    174AuntieLeft

    The last thing we need is these clowns in charge of of economy, just when it appears we have turned the corner.
    -
    Yer, pity that just around the corner we seem to be sliding down a triple dip financial cliff with little hope of stopping the decline never mind reversing it

    Tories are better in charge of the economy? Only if you're a banker or on the board of a privatised utility.

  • rate this
    +2

    Comment number 250.

    192.ExpatKS - you do realise that for most of their last term Labour had a surplus and not a deficit. Also before the current lot took over the economy was growing until self defeating austerity was introduced.
    UK is not bankrupt but has a temporary problem with the deficit which can only be reduced if the economy grows and tax receipts increase. The banking crash caused our current problems!

  • rate this
    +1

    Comment number 249.

    A mansion tax discriminates people depending on where they live in the country, it is not income dependent and specifically is a burden on pensioners. I think it is an entirely unfair scheme.

  • Comment number 248.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 247.

    Ed yet again making pledges on spending saying how many people it will benefit without being able to say how much money this would bring in. No mention of how he is going to pay off the £125 million a day debt interest payments with dealing with the debt itself. They haven't got a clue, especially as they have already pledged this money to job schemes and house building in the past.

 

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