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Low earners will not forget Brown's 10p tax shambles - for The Inverness Courier
LAST week, the government finally announced how it intended to tackle the consequences of its decision to double the 10p tax rate. The disgraceful decision — made by Gordon Brown in the 2007 budget — led to 5.3 million of the lowest earning taxpayers to pay more income tax.
Mr Brown was warned on the day he announced this change that it was a tax rise for the poor to pay for a tax cut for people higher up the income scale. The then Liberal Democrat leader Sir Menzies Campbell was the first to spot that the 2p cut in the basic rate of tax — announced with a theatrical flourish by Mr Brown in his last budget before becoming prime minister — was to be paid for by low earners.
In fact, it turns out Mr Brown was warned about this by his own officials even before the budget was made. Treasury officials told him that low earners would pay more, but he reportedly arrogantly told them this was a political decision and he knew more about politics than they did. How wrong he was.
So last week the new chancellor, Alistair Darling, said the government would raise the threshold from which income tax was paid in order to compensate people. Astonishingly, Mr Darling, along with Labour MPs and most commentators, seem to think that the matter is now over. It is not.
Mr Darling's change still leaves 1.1 million people paying more tax. He has chosen not to compensate the very lowest earners who were affected. So, if you earn between about £6000 and £12,000 a year and you don't receive tax credits, you will still be a net loser from Labour's shenanigans. Many families in the Highlands, where incomes are much lower than the average across the UK, will continue to pay the price.
Why did all of this happen? Mr Brown's objective was purely political — he wanted to be able to announce a tax cut to put the Conservative party on the back foot. Unforgivably, he was willing to sacrifice the best interests of hard-pressed low income families to achieve this political end.
Most Labour MPs were all too willing to cheer Mr Brown on when he made this announcement. The Conservative party did not vote against it when it was first proposed. Only a small number of Labour rebels, the Liberal Democrats and the nationalists took a stand.
Mr Brown has shown himself to be a prime minister who will put short-term political advantage above the interests of the people he is there to serve. He will find it much harder to be believed when he poses as a champion of the poor, having been so willing to sacrifice his principles for so little.
The position of the Conservative party is equally shallow. They refused to vote against the doubling of the 10p rate when it was first proposed, but wish to be seen as the champion of the poor. Yet the only tax cut they have proposed — to inheritance tax — would benefit only the richest six per cent of the population.
At prime minister's questions last week, Mr Brown and Mr Cameron behaved as if this matter was over. Only Nick Clegg thought the plight of the 1.1 million who will still pay more was worth raising — why should these people pay the price of the prime minister's incompetence?
Mr Brown has been deeply damaged by this episode. A prime minister who already looked like a ditherer has now shown himself to be driven by political calculation, not principle. It is still hard to believe that it was a Labour government that freely chose to raise tax on the poor — and that will not be easily or quickly forgotten.
Posted on: 20/05/2008
