Coffee Housers will soon be piling in with their own take on Alistair Darling's performance on BBC1's Andrew Marr Show this morning -- he seemed to accept the abolition of the 10% income tax band had created serious problems by promising to return to the matter in future budgets (maybe even this year's pre-Budget Report) -- but I have seen the impact of the scrapping of the 10% band at first hand.
My part-time cleaner -- who works for me several hours a day -- is now £8 a month worse off after tax as a result of Gordon Brown's decision to double the starting rate of tax in his last Budget as Chancellor. Now £96 a year is not a crippling loss, even for lowish-paid cleaners (and I will make it up to her by increasing her pay), but she hardly deserves to be worse off in any way. Across the political spectrum, people are asking: why penalise, even by small amounts, those who get up early, work hard for modest amounts of money and pay their taxes? If anything, such strivers should be paying less tax, not more -- or better still for the lowest-paid, no tax at all. Above all, people are saying, why is a Labour government doing this?
I don't know enough about my cleaner’s personal circumstances to work out if she will qualify for any of the Brown/Darling compensating handouts (she has no children so there will be no increased family tax credit). In any case, what is the point of taking away with one hand and giving back, through a Byzantine bureaucracy and complicated forms, with the other? Why not simply let them keep more of what they earn?
I remember in the latish 1980s my then cleaner telling me that her poll tax was higher than mine -- and knew then that the game was up for the controversial Thatcher local tax reform. This could be a similar defining moment for the Brown government.