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
    0

    Comment number 1326.

    1288.bill d berg
    There IS NO DEBT.Its invisible money,deliberately brought about by the central banks
    -----
    Fascinating.. the UK has had a national debt since the 17th century - who'd have thought the central banks did it, and it had nothing to do with the expansion of the British empire.

  • rate this
    -2

    Comment number 1325.

    Dear God help us,if this lot on here are all going to vote ConDem again.
    I dont support any of the parties anymore,but please let us have the lesser of two evils....

  • rate this
    +1

    Comment number 1324.

    Milibandwagon said "We would put right a mistake made by Gordon Brown and the last Labour government," yet he & Balls were apart of Brown's inner circle that made that decision & now he's trying to pass the buck for his error. Also it's good to see yet again BBC News paint a good picture of his speech yet this isn't part of his manifesto just hot air.

  • rate this
    -3

    Comment number 1323.

    IF Labour get in. Big IF!

  • rate this
    +3

    Comment number 1322.

    I do not trust politicians who support blindly big business, such as the last Labour gov't and especially this Tory gov't - only when business is directed to work for the country and not the for the benfit of rich anonnymous shareholders will anything change, all the rest is just tinkering with pennies.

  • rate this
    +3

    Comment number 1321.

    A Mansion Tax? a 10p TAX a 20p tax? They NEVER talk of cutting the TAX do they? All of them I mean. If we stopped giving Billions away every year the money would fund old age, would fund University education would fund resurfacing our roads......But No, lets give the money away for guns in Africa? Give money away to our enemies and hope they leave us alone.
    Our Political system is sick!

  • rate this
    +1

    Comment number 1320.

    Most people don't give a monkeys what Labour would or would not bring back since they ruined the economy in the first place and have yet to make a formally apology for it.

  • rate this
    0

    Comment number 1319.

    @1303. Andy
    "A Labour government would seek to re-introduce terrible policies, aimed at giving people something for nothing."

    Whereas a Tory Govt will give the ordinary working person nothing whilst expecting them to graft to subsidise tax breaks for their rich pals.

  • rate this
    0

    Comment number 1318.

    I have no problem with the 10p rate of tax, but fail to see how he will raise anything worthwhile with a mansion tax, raise the rate of income tax for those above £250k or some such figure, clamp down on offshoring money (this includes HMRC not selling properties to Offshore companies) clamp down on Non-dom status (hello the Barclay twins) & reject the likes of Eton being registered as charities

  • rate this
    +4

    Comment number 1317.

    The only thing that will make life better for the majority is to cut taxes dramatically.

    And stop this emotive blackmail, of 'The Poor' this, 'Minorities that' etc, you CANNOT please everyone.

    Cut taxes, and promote consumer consumption.

  • rate this
    +6

    Comment number 1316.

    Incredulous at those saying "get of your backside" and other insults to infer people on benefits are scroungers - When were you people last in the job market? I worked for ten years straight out of school until last year when I was made redundant. I've gone from a decent 40hr a week job to not even being considered for a 16hr shelf-stacker position at Tesco. Try looking out your window some time.

  • rate this
    +6

    Comment number 1315.

    The tax free personal allowance (£ 8,105) is higher under this government than the personal allowance and the 10p band were combined (£ 5,225 + £ 2,230 = £ 7,455) before the abolition of the 10p rate in 2008.

    Even accounting for inflation, it seems over time the 10p rate has essentially been abolished entirely in an overall tax cut, rather than replaced by a 20p rate. This speech oozes spin.

  • rate this
    +10

    Comment number 1314.

    Strange how this didn't happen when labour were in power.........

    Would it be cynical to suggest it's a bribe to get back in??

  • rate this
    +1

    Comment number 1313.

    @1265.All for All

    Dear All for All

    Why have you chosen this subject to write almost complete sentences and produce something bordering on the 'lucid'?

    It's like you care about politics?????


    I want the old 'AllforAll' back. The pseudo-orwellian/carrolian, bute-infected, AllforALL, complete with inappropraite apostrophes, and languid, dreamlike non-sequiturs

    I miss them!

    I voted you up anyway

  • rate this
    -1

    Comment number 1312.

    #1302

    Fine. In that case, we can do away with the current unfair Council Tax, where in Scotland you pay more for less, due to unequal banding systems over the border. Properties in the South rise and rise in value, but the tax doesn't rise as high in proportion.

  • rate this
    -1

    Comment number 1311.

    Mr. Fisher - as of this moment tax is still being deducted from my pension. This may change with the next tax year beginning in April. I hope to put what I will save in tax towards a life of luxury. But I suspect the Tories and the Lib Dems (sorry - I usually forget them) will find another way to part me from my hard earned pension.

  • rate this
    +3

    Comment number 1310.

    10% tax rate, thats £2 per week extra for workers on low income, not many extra votes there then. Do you think they will stop at 2M £ homes? review of CT bands will draw all CT payers into their web of deceit, all CT payers will be worse off! including some low earners.
    Would you buy a used car off these people?

  • Comment number 1309.

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

  • rate this
    +4

    Comment number 1308.

    Ha, ha, ha, ha......
    He either is a fool or takes the British public for fools.
    Not sure which one yet, probably both

  • rate this
    +1

    Comment number 1307.

    1239 totally agree Harold Wilson proper working class lad proper labour leader Milliband middle class posh kid same as Balls shouldn't be labour leader bad as Blair. Harold would have never uttered the words 'one nation' it's tory slogan.

 

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