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

 

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

Related Stories

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."

 

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +6

    Comment number 1226.

    Sorry.....but as a Labour voter (on occasion) in the past I simply cannot take Ed M seriously as a politician. And this latest tax "wheeze" will make absolutely zero difference to anyone.

    What a massive mistake Labour made in not choosing his brother.

  • rate this
    +7

    Comment number 1225.

    Ed Milliband on the side of the working people!..utter rubbish
    I am one of the working people and I don't want him or Ed Balls on my side thanks.
    No he is on the side of those who don't want to work or contribute to society

  • rate this
    -6

    Comment number 1224.

    I see the Tory supporters are out in force, negatively rating any support for Labour’s sensible proposal (to re-distribute wealth and give support to the hard-working millions). It’s just a sign that the Tories are rattled and worried because they know Ed Milliband’s policy will appeal to half the UK population (while the Tories continue to protect the interests of the richest 10%).

  • Comment number 1223.

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

  • rate this
    +4

    Comment number 1222.

    @1214.Enigma1234
    No they didn't, they used PFI for that, so just where did they spend all the billions they borrowed?

    ---

    Public sector payrolls

  • rate this
    +10

    Comment number 1221.

    @1127.Dancin Pagan...
    "At least they spent the money on things like - new hospitals, new schools, generally improving the lot of the majority of people in this country."

    They didn't pay for hospitals and schools - they built them on the never-never via PFI making huge profits for the contactors. Some of them hid their profits from tax thanks to HSBC! We'll be paying for these forever.

  • rate this
    +5

    Comment number 1220.

    Once again a statement from Milliband but no solid backing from him or the labour party.

    Oh our ideas are right but we haven't got the guts to put them down on paper. This is exactly the same as the last election where instead of saying what their actual position was, they just said other peoples ideas were wrong and they would do it better.

    A man I do not want to ever see running this country

  • rate this
    -1

    Comment number 1219.

    Labour make annoucement that goes down with the public, BBC HYS floods with people tyring desperately hard to play down the significance.

    I bet the Mail & Conservative Home websites are quiet today, what with so many of their members posting here pretending to be ordinary joes. How worried are the goverment parties?

    It used to be visa versa when Lab were in power, but never so vitrolic....

  • Comment number 1218.

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

  • rate this
    0

    Comment number 1217.

    LOL.
    Hilarious to see the party paid trolls and spin-doctors out in force today.

    Some of them aren't even bothering to hide: biased names created especially for today LOL.

    It's worse than the Apple v. PC paid trolls over on the Tech page.

    Do these idiots honestly think they're really going to influence public opinion? What a waste of time...

  • rate this
    -3

    Comment number 1216.

    "248.AndyC555
    The benefits given to you are the taxes paid by me. You want a decent standard of living? Why not earn it yourself instead of sponging off me?"

    So you buy UK made at every opportunity, to help provide jobs for the unemployed? Or do you just get off at shouting at the unemployed *you* help create and think that is somehow having a hissy-fit is going to create the 2m jobs needed?

  • rate this
    +5

    Comment number 1215.

    Labour doubled my tax bill on a pension of under £8,000pa.The Tories are forcing me to use up my savings of £40k because I don't earn any interest on it to supplement my (taxed) pension.The DWP assume that sum earns £70 pw in interest so do not pay me pension credit or any of the other income related benefits for those on low incomes. Both parties posture but NEITHER CARE.

  • rate this
    +4

    Comment number 1214.

    1127.
    Dancin Pagan The Mad Kiltie
    26 Minutes ago

    "At least they spent the money on things like - new hospitals, new schools, generally improving the lot of the majority of people in this country."

    No they didn't, they used PFI for that, so just where did they spend all the billions they borrowed?

  • rate this
    +6

    Comment number 1213.

    The Tories & LibDems have 2 secret weapons up their sleeves at the next election it's called Miliband and Balls.

  • rate this
    +5

    Comment number 1212.

    This tax change won't bring much relief to people on low incomes. Raising the threshold for personal allowance is definitely the better solution. As for the mansion tax no-one on the Labour side has explained how it is going to work. Why has it take nearly 3 years for Messrs Miliband and Balls to admit a mistake on removing the 10% rate?

  • rate this
    +2

    Comment number 1211.

    #1188
    "I think that's what I hate most about the Tories, they take a really nasty tactic which they are past and present masters of and try to pin it on others.

    They are also masters of hypocrisy of the dirtiest, lowest kind.

    Add ignorance to that & you have the chemistry of Tory bile."


    They keep raising the tax allowance. If they were truly nasty, they would lower it.

  • rate this
    +6

    Comment number 1210.

    10p tax rate?

    Small beer compared to what the Coalition have done (mostly due to the Lib Dems) in raising the income tax threshold from £6475pa to £9440pa already, with plans to raise iit to £10000. This is already saving every basic rate taxpayer £600 a year.

    If cutting taxes for lower paid workers is such a good idea (and it is) why didn't Labour do it during their 13 years in power?

  • rate this
    +2

    Comment number 1209.

    1146. Auden Grey
    17 MINUTES AGO
    I know the coalition is pretty awful, but will people really vote for Ed (the sneer) Milliband, UKIP supporters must be dancing in the streets.

    ==

    Excellent - lets split the right wing vote even more...

  • rate this
    +3

    Comment number 1208.

    Ed and Ed are just after votes. This country could not take another period of Labour government. I suspect the next government could be a Libby-Labby coalition. R.I.P. Great Britain. I'm moving to Scotland and hope they vote for independence.

  • rate this
    +5

    Comment number 1207.

    Between 1997 and 2010 every adult was left with a £30k debit balance on the Labour credit card due to spending they could could not afford and trusting the FSA to control the banks. As a result we are all suffering massive cutbacks but the debit balance is now down to £22.5k. Fast forward to 2015 and in walk Ed and Ed - borrow and spend, up goes the balance...back to 2010. Are we that stupid UK?

 

Page 6 of 67

 

More Politics stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.