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
    -2

    Comment number 1266.

    Sadly not impressed by the Eds but not impressed by tories either we could end up with any variant of a coalition maybe 3,4 or 5 parites in it at this rate bit like the current Greek coalition just hope we don't have extremists on the street like Greece.

  • rate this
    +1

    Comment number 1265.

    Forgiven, under bruised Brown, 'bad signal' of 10p cut, made-up-for by means-tested state-charity?

    Can headline-need, Eastleigh, excuse 'clear mistake' of abandoning fair pay?

    Will the next two years be 'time enough', to bring forward the real vision?

    Giving benefit of the doubt, Mrs T saw a property-owning tax-payer democracy

    From Mr M we should expect an equal-income-earning real democracy

  • rate this
    -2

    Comment number 1264.

    ronnieboy is infected with Daily Mail - itis. Why blame the desperate workers with no jobs for taking what they can get? Blame the employers who pay less than the minimum wage (which is low enough as it is). And the supermarkets who put so much pressure on them. The useless rich are laughing at you ronnie.

  • rate this
    +2

    Comment number 1263.

    "1240.AndyC555

    #1216 I take responsibility for my own state of employment and income. I wish others would instead of expecting me to bail them out"

    So you are just part of the problem, making no effort to be part of the solution. Pay your taxes and stop winging, you can't have it both ways - tax is inevitable with unemployment, and unemployment is caused by lack of jobs, *not* the unemployed.

  • rate this
    +3

    Comment number 1262.

    Sorry Mr Miliband, but your ploy to get a few voters does not cut the mustard. Labour caused enough debt for the country last time they where in power and in fact the time before that. I just hope the public see sense and are not that desperate for a few pence every week to the cost of spending billions on benefits which we should be phasing out unless people genuinely need them.

  • rate this
    0

    Comment number 1261.

    The economic mess was not 'caused' by Labour it was 'caused' by fraudulent banking worldwide! It's why most of the rest of the world are in the same or an even greater mess! Labour policy did however contribute to our own bit of the mess by borrowing far too much & wasting a lot on the wrong things! A lot saw the economic trouble coming way before the government at the time did, how come!?

  • rate this
    -1

    Comment number 1260.

    Well said Bill @1245. I agree totally - apart from the Royal family part (as a supporter of Royalty).

  • rate this
    +1

    Comment number 1259.

    One of the only good things labour did was to introduce the 10% tax rate--
    then they went and abolished it!!
    It needs to be brought back to give a helping hand to low-wage earners and low-to-less-than-well -off pensioners such as I imagine the vast majority of pensioners are.
    M.P.s have no idea of living in the real world--they are cosseted by their
    obscene allowances and not-bad-at-all salary.

  • rate this
    +2

    Comment number 1258.

    Well i plan to vote UKIP at european election and tactically vote Tory at general election purely for the EU referendum and i know that labour flood this country with more immigrants .

    Dont suppose the scots will have the guts to leave UK .

    [Observing the advance of the Gordon Highlanders] Napoleon Bonaparte: Has Wellington nothing to offer me but these Amazons?

  • rate this
    +2

    Comment number 1257.

    Great headline grabber, but from what I remember the threshold was a lot lower, so a lot more people paid tax a lot earlier.

    Personally I'd ensure nobody on minimum wage paid income tax (approximately £11,000) but adjust VAT and income tax rates so that nobody on lower than average wages lost out - and a good number would be far better off.

  • rate this
    -2

    Comment number 1256.

    Reading a lot of the posts Tory HQ appear to have hired a squad of monkeys, sat them down in front of keyboards & if they type for long enuff will produce something anti-labour.

    You can tell from the typos that they are just pumping it out as fast as possible.

    Which is a shame, as there are genuine tories on here with whom I disagree but respect their right to opinion.

    Monkey see, monkey do :-)

  • rate this
    +9

    Comment number 1255.

    Labour or Conservative its all corrupt. These people acting as false prophets with their magic ways to fix all our money problems, whilst they sit in their golden thrones, paid for by the tax payer.

    My taxes should pay for the NHS, my rubbish to be taken away, the roads I use to exist, ect.

    Instead they pay for the newest flat screens for Johnny Dobber and those politicians who have everything

  • rate this
    +5

    Comment number 1254.

    A vacuous "policy" statement from a vacuous leader. A Labour Party led by Ed Miliband and Ed Balls will never win an election. Two chancers pretending to know all about the working classes from the dizzy heights of their millionaire mansions. A hypocritical and untrustworthy pair.

  • rate this
    +3

    Comment number 1253.

    And the weather will always be sunny

    The birds will always be chirping

    And the nasty parts of life will just disappear altogether when I snap my Prime Ministerial fingers

    Roughly translated as

    “Vote for me OH PLEASE PLEASE PLEASE I’ll be your best bud REALLY REALLY REALLY- Would I lie to you?”

  • rate this
    +6

    Comment number 1252.

    @1215.expat2013
    "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."

    Thanks to the Lib Dems, you now at least don't pay any tax at all on a pension of £8000pa.

  • rate this
    +5

    Comment number 1251.

    @1202.McGill
    How much are we giving Dave in tax breaks again?"

    McGill - I'm no Tory but notice you talk of Cameron & tax breaks yet under Labour, millionaires were paying less tax than the people they employed to clean their offices.

    Why do people like you still deny these facts? All 3 main parties are it so please take off your political blinkers.

  • rate this
    +2

    Comment number 1250.

    1228.Strictly Pickled
    I thought that the 10p band was not so much scrapped but doubled.
    ---
    It was scrapped. The 20p band already existed as well as the 10p band.

  • rate this
    +4

    Comment number 1249.

    "1214.
    Enigma1234
    Just now

    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?"

    On failed projects, reams of bureaucracy and an illegal war on Iraq.

  • rate this
    -8

    Comment number 1248.

    1219.
    Little_Old_Me
    "HYS floods"

    You are very naive if one might say so, all the "ratings" are by the Tory gangs on here so rattled. They have brought out all their K9 friends to defend this dog of an incompetent govt. Surely you have noticed that you are bullied every day here by them then you start to dilute your comments The facts are this is an extreme right wing govt destroying the Economy

  • rate this
    +10

    Comment number 1247.

    343. samb-1488
    DEAR LABOUR,
    RAISE BENEFITS SO WE CAN HAVE A DECENT STANDARD OF LIVING.

    THE WEALTHY SHOULD BE TAXED AT 110%.
    THEIR SO RICH THEY CAN AFFORD IT!
    ---
    So people who have earned their money through hard work should just give it all to you, so you can sit at home on your benefits and contribute nothing? In your dreams, my illiterate friend.

 

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