Darling announces 10p tax compensation

Tiberius

Why are the Tories wrong-footed? Has not Darling committed the very policy sin Labour has accused the Tories of for years: an unfunded tax cut, ie, a tax cut paid for by borrowing? Or does Nick Robinson inhabit the world of fairies where economic mismanagement is a crime limited to the Tories? It's shocking that Robinson isn't reporting this as a reactive measure, borne out of blind panic, and further risking the economy that Labour has already damaged considerably over the last 11 years.

Mike

...Unfunded Labour tax cuts! A black hole in the public finances...! etc etc
Note this is for one year only. There are still 1.1 Million very low earners that this will only partially help (it shows you how complex the misma of tax allowances and credits now is). We should all welcome raising the tax thresholds, but not in this manner.
There is no cash left in the kitty, so Darling / Brown are going to have to borrow more money to partially correct their unprincipled tax grab on low income families. What happens next year? Will this increased tax allowance be lost through fiscal drag? What happens to the 1.1Million losers? What would have happened if there was no by-election? Is there no problem this government will not just try to borrow itself out of?
Is it me or is this also a tax cut for higher income earners (or just more treasury incompetence)? They raise the 20% threshold by £600 yielding a benefit of 20% * 600 = £120 but reduce the 40% threshold also by £600. This is a loss to higher rate tax payers of 40% * 600 = £240. So a net loss for higher rate tax payers of £120? Darling seems to think this is neutral for higher rate tax payers. It isn't. Funny they didn't mention it.

AlanofEngland

How could anyone be "wrong-footed" by a Darling announcement that was only necessary because an economic illiterate, Gordon Brown, and his successor, also economically illiterate, Darling, made a cock-up a year ago? It's truly the economics of the mad-house, which was created over 10 years by Brown. As a matter of interest, isn't such an announcement during a bye-election illegal?

Edward

Errr...Labour has taken a lot of heat over the 10p tax and they're trying to rectify it, because they think that is what is wanted. If they stuck to their guns they would be 'arrogant' and 'out of touch'. So they try to remedy it. Why is that a bad thing? What should they have done?

Madasafish

>Edward
A sensible and competent politician would not have made the 10p error.
Period.

Oscar

Edward - Labour have made a complete horlix of the 10p tax fiasco from start to finish. I suspect Robinson is reading from a Labour script with his 'wrong footing' the Tories jibe. That's exactly what was said when Brown introduced the wrteched measure in his last budget. Actually he just wrong footed himself. Darling has made the same mistake. A brief moment of triumphalism to be followed by a long period of embarrassment while it all unravels.

hysteria

horlicks....?

Ted Tedford

This isn't 'wrong-footing', it's 'reacting'. And 'reacting' is what you do when you've lost the initiative. The Tories should be making that clear.

Travis Bickle

"Policies for the Long Term" indeed.

What a complete shambles

Max Kaye

The only one 'wrong footed' are the Labour MPs who applauded this piece of short-term chicanery.

mart

Reducing tax is great. Very welcome.

Choosing NOT to reduce spending commensurately but instead to say "we'll pay for it later, somewhere, somehow" is, well, others have said it. An unfunded tax cut.

Alf Tupper

Madasafish has it right.

These people are supposed to be our leaders, and they chose to try and slip us one while we were tipsy.

I'm using another bar.

Robert Williams

Edward "they're trying to rectify it"

Not very well. The losers were those on low income because they made little or no gain from the reduction in the standard rate (22 to 20p) to offset the up to £230 increase resulting from the doubling of their 10p rate.

Darling's fix provides benefit at all income levels up to about £40,000. Those with income over about £20000 were already gaining from the change. But those with income £7500-£10000 are still about £100 worse off.
A Labour government!

Robert Pelik

Tories "wrong-footed"? I am no economist, but it seems to me that GB has just put us - the public - £2.7 billion more in debt to save his own political skin before a by-election. And the original tax changes were made mainly to win the general election that never was. Or have I missed something?

paul freeman

Exposing the 10p Compensation Con.

Example 1 - Winners: Household with two earners on £18000 pa were not losers anyway as they gained from the 20p band what they lost. Now Alastair just gave them £240. What for other than to buy their vote?

Example 2 - A winner and a loser?: Household with one earner on £18000 and one on £8000. They jointly recover what the lower earner lost. But hang on, only if they pool their earnings, otherwise the lower paid person is still only half-compensated directly.

Example 3 - Losers: Two earners on £8000. They lost £440, they get £240 compensation.

Example 4: - Loser: Single earner/60-65 pensioner on £8000. They only get half compensation.

Alastair's figures on 'households' affected are rubbish. How can he know, since partners' tax records are not linked. What is a household these days?

Add up all the INDIVIDUALS who are not directly and fully compensated and its many millions. Women in particular are likely not to share in their partner's compensation - many couples have separate finances and keep them separate.

This is crude vote-buying. Temporary and adding £2.7 Billion to borrowings. New Labour running scared. Well they scare me!

Edward

George Osborne 20th April 2008: 'What I can say is that we will try and have a simpler and fairer tax system. And whether that is restoring the 10p band or, as our own policy group, the Tax Reform Commission advised, you actually raised the thresholds and in effect turn those people's tax rates into zero which interestingly enough the IFS says is a fairer way of doing it, you know, we will see.'

He also said he wouldn't reduce spending. We're in a mess, the current lot have made a dog's breakfast of the economy, but Coffee House should be giving Osborne/Cameron more scrutiny rather than being their cheerleaders.

Arthurmoe

An unfunded tax cut, surely you would be critisising the tories for that Nick. People aren't daft though this "government" thinks they are.

Jock

Edward

£2b of the £2.7b - ie 74% - is going to 17 million taxpayers people who did not lose out over the 10p decision.

Of the 5 million losers who are being helped, 1.1m will remain losers.

So £0.7b to fail to fix the problem and an extra £2b dished out as tax bribes from a Government in a deep hole and approaching a by-election.

Same Government, by the way, who reneged on a binding arbitration pay award to the police on the grounds that the £30m cost (ie 1% of £2.7b) might stoke inflation.

From complex 'means tested' benefits to 'beyond our means' tax bribes.

Desperate stuff from desperate men.

jose garcia

so... when are we getting our 10p back?, this money was announced a couple of months ago already....my payslip hasnt changed