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
    +12

    Comment number 1306.

    When the current Government is fully committed to increasing the tax free allowance to £10k only a moron would come up with a policy about an outdated 10p starting tax rate.

    Now if Labour said they are planning introduce a living wage for all full time employees, both private and public, then maybe people would start listening to them but please, this announcement is just drivel.

  • rate this
    -4

    Comment number 1305.

    No he wont, the government as we know it is going to come to an end very soon.

    http://www.madlands.co.uk/ for full information.

  • rate this
    +4

    Comment number 1304.

    It would be far cheaper not to tax people too much in the first place. why not just allow people to keep their own hard earned money and give better tax free income starting at about £12/14000, that way if you don't earn enough to pay tax even at 10p you don't which is by far the fairer as our tax workers would not have the difficult working out as to what everyone has to pay.

  • rate this
    +9

    Comment number 1303.

    A Labour government would seek to re-introduce terrible policies, aimed at giving people something for nothing.

  • rate this
    +1

    Comment number 1302.

    What should be changed is the stamp duty, it should be based on meters squared and not value because why should a 3 bed house in the south east pay 3% stamp duty but a 5 bed house up north can pay none or 1%.

    that would be fairer.

  • rate this
    +12

    Comment number 1301.

    """1235. Daffodiljar
    Some here have swallowed the Tory fib about Labour's mess - the problems were caused by the financial sector."""

    Please can I borrow your rose tinted glasses?
    Labour came to power when the economy was booming and there was a lot of gold in the government's coffers, and our international debt was the lowest ever.

    Blair and Brown blew the lot and then borrowed excessively!

  • rate this
    -2

    Comment number 1300.

    1297.totalastronomy - "................Is it not curious that Ed Miliband is actiing as the Official Opposition the the last Labour Govt?"


    I'd call it a breath of fresh air - far too often both sides refuse to accept that their side might ever have done anything wrong, ever......

  • Comment number 1299.

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

  • rate this
    +1

    Comment number 1298.

    1243.Trout Mask Replica
    Isn't that what Mao and Pol Pot advocated and actually tried to realise?"

    Well under Labour, the UK became full of 'Pol's' and the country went to 'pot' - we certainly realise that.

  • rate this
    0

    Comment number 1297.

    What is the formal definition of a mansion? What about ordinary people who live in "mansions" that have been converted to a dozen flats? What about individuals who own £2million+ in property spread across several homes?

    Is it not curious that Ed Miliband is actiing as the Official Opposition the the last Labour Govt?

  • rate this
    +6

    Comment number 1296.

    1234 "They all (politicians) fell for the bankers scam"

    They didn`t fall for it - they were all in on it!

  • rate this
    +6

    Comment number 1295.

    So if in power Milliband says he will raise £2bn from his "mansion Tax" even at 70,000 homes above £2m (which I doubt) that's over £28,500 per year tax per house. Not going to happen. But its enough to get your average Labour voter excited which will stop them noticing Labour welcoming in another 1/2 million migrants like they did last time. Such fun

  • rate this
    -4

    Comment number 1294.

    so if people living in £2 million pound mansions are notrich who are ? tories out

  • rate this
    +12

    Comment number 1293.

    Another opportunist attempt to bribe the people with their own money. And he accuses Cameron as being Flashman!

    The Labour Party abandoned working people years ago.

    What is needed is a commitment to full employment within a manufacturing economy which is far more egalitarian in which people are paid a proper wage.

    Blair's flexible workforce based on services, poverty and insecurity must end.

  • rate this
    +1

    Comment number 1292.

    @Tony Fisher.

    Your tax bill would have been very low in 2007 prior to the change, so doubling it from not very much to twice not very much was hardly a big deal.

  • rate this
    +1

    Comment number 1291.

    ... shortly followed by the flying pigs he is so busily training, because I do not know what else he is doing, other than keeping his own snout deep in the trough, so laughingly called "the MP's expenses system".

  • rate this
    -2

    Comment number 1290.

    You assume all those that live in a 2million house are wealtthy


    -If you own a £2 million pound house ( mortgage free) you are One of the richest 0.3% of the population)

    If you have a mortgage on it you must earn if the properly is recently purchased over £500,000 pa.

    It is only in Tory La la Land that multi million quid houses are all occupied by OAP's on the state pension

  • rate this
    +4

    Comment number 1289.

    Labour will bring back the 10p tax rate?

    No they won't. That would signal lower wages offered by companies knowing we'd be taxed less. Don't think Mr Milliband has thought this one through.

  • rate this
    0

    Comment number 1288.

    everyone is talking on here about this massive "debt".There IS NO DEBT.Its invisible money,deliberately brought about by the central banks aka the Rothschilds.All the banks are bankrupt,existing off our interest payments.Throw out this austerity ideology and follow Icelands example.PUT THE CRIMINAL BANKERS and CORRUPT POLITICIANS in the dock.Then this country MAY just have a chance of recovery.

  • rate this
    +6

    Comment number 1287.

    The shadow business secretary this morning on the BBC said this speech would offer new thinking.

    So labour's new approach is to U turn on a tax policy that their previous chancellor, before he sneaked into number 10, got wrong. By taxing big houses. OH and VAT.

    Wow how original - I expect that the shadows will deepen over the shadows if this is original thinking.

 

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