What Brown's abolition of the 10p band means for 5.3 million families

The above list comes from a research note just produced by CCHQ.  A senior political editor told ConservativeHome only two days ago that the Conservatives were now producing the best research material of the three political parties. 
Download a PDF of the whole research paper... and let's hope it appears in lots of newspapers tomorrow.

Comments

[Joe James Broughton]

It was an extraordinary move (replacing the 10p rate with the standard 20p income tax).

It seemed like a political agreement was developing that we should eliminate tax completely from the old 10p rate as soon as affordable.

Taxes need to be reduced at the bottom. It seems like the government prefers to give people benefits instead - that does nothing for incentives, and is bad for the economy.

[Adam-]

The Conservative Party needs to shout louder. Compare the bloodcurdling screaming over inheritance tax and stamp duty to the current muttering and dithering over this.

The current attitude, "We think this is not a good idea" just doesn't cut it. George needs to rip Darling and Brown apart over this as soon as practicable.

[Mike Thomas]

Loathed as I am to join the scream for unfunded tax cuts, this is a golden opportunity for the Chancellor.

Reinstatement of the 10p tax band and a higher starting threshold by the abolition of the tax credits system.

And then tell the electorate that they will only start paying tax at £x and even then only 10% until £y.

[Rod]

You have forgotten my wife who receives Retirement pension and a small company pension. She is not happy.

[Jim]

Cleaners £5,883 per annum
= £113.13 per week
= £2.83 which is about half legal minimum wage.
How have these figures been calculated?

[John F Aberdeen]

Very good research however does it include the fact that the personal allowance has been frozen by Brown ever since he was chancellor.
If you add in that fact plus the extra costs of inflation, council tax,and that other hidden stealth tax, National Insurance, the people on low wages must worse off than the figures quoted above.
Thats why I hope that the first priority of the next Conservative chancellor is to upgarde the persoanl allowance to between £12,000 - £15,000 to take most of those on low wages, out of paying tax all together.
If we want to target Essex man again this would be a good way to get their and other low paid workers support.
As for the means tested benefits, what sense does it make for people to pay tax,, then get money back from the government. Why not do away with benefits, lower the tax burden completely, make it simple,, eg, high personal allowance and a flat rate tax,,, then re-deploy the staff from the Inland Revenue and the DHSS to the private sector to find meaningful productive employment.

[Tony Makara]

True to form the Labour government is hitting the lowest paid in our society. How dare this party present itself as the champion of the poor when all it ever does is widen poverty. Those on low wages should be taken out of the tax regime altogether if we are to stand any chance of ending poverty in our country.

[David Belchamber]

I applaud this research note, as I did the cost of living one.

The latter needed summarising into soundbites, which everyone should take every opportunity to publicise. These figures are real and affect the well-being of millions of ordinary people.

CCHQ might also like to look at personal tax thresholds in 1997 and index link these (using the proper cost of living index) up to now. That could be illuminating.

I will quote again John Cole's extremely relevant dictum: "Politics is only important through the effect it has on the lives of ordinary people".

This tax rise, together with the present cost of living, will have a tremendous effect on the lives of ordinary people.

[Joe James Broughton]

I agree with these posts. I'm not a fan of many American things but I believe they set a much higher personal allowance.
Although lower taxes bring more revenue in - over time, £12,000 is just not going to be possible if the Tories open up the books at the moment, but we should certainly make this a big issue and try to take several thousand pounds above the current personal allowance tax free.

[London Tory]

The only time Labour needs the poor is every 4 years on Election day. In the intervening period it pats them collectively on the head, and keeps them in their place.

I loved the sheer gall of Nia Griffiths MP, the non entity and Labour stooge who allegedly tackled Brown on this at the PLP meeting this week [a cynically leaked piece of spin to keep the Daily Mirror on side].

She referred to the poor as "our people".

Made me smile, that one.

[Andrew Lilico]

The 10p band was a stupid idea, introduced by Brown, which harms the poor rather than helping them (they do better by having the personal allowance raised - the best rate of tax to pay is zero), which we should have had the gumption to oppose more vigorously from the off, and the abolition of which we should now be applauding as yet another Gordon Brown u-turn, not opposing.

[passing leftie]

This is just the kind of selective crap I've come to expect from the Tories. If you want to find out whether these people are better off, use the Times Budget Calculator, not hand-picked figures from Central Office. Is it duplicity or stupidity?

http://extras.timesonline.co.uk/pdfs/budget2008taxtables.pdf

Let's just take a couple shall we?

Single person with child earning £5000 is £446.40 better off.

Single person with no child earning 10000 is 365.40 better off.

Look up as many other examples as you want.

[Peter Harrison]

Jim - you have assumed a 40 hour week. Most cleaners are part time with a substantially shorter working week.

[Bill]

Andrew

I always thought the 10 pence rate was a bit of a gimmick. But are you saying its abolition will not make the worse off more worse off?

If however you are simply advocating better reforms, I would be all for no tax to be paid until income of at least £10K. The Tories should have been much more vociferous in opposing Labour's taking with one hand and giving less back with the other. Let's have a flat tax and scrap the inefficient and unfair tax credit regime.

[Old Kent Boy]

Passing Leftie,

Let uis assume you are right for one second - can you explain the sense behind increased the amount of tax people pay and simultaneously increasing the amount returned in tax credits?

Here's a thought - TAX THE POOREST PEOPLE LESS! Not only would it cut out lots of paperwork, but make people less dependent on the state. But Labour would not want that would they!

[David Belchamber]

Passing leftie, it seems like Gordon Brown, Ed Balls and all the others, you don't address the specific point but answer something else.

Quite simply, if low earners have to pay 20% income tax where before they paid only 10%, they are now paying twice as much income tax on that particular band.

I am not talking about family tax credits making up the shortfall (if you have a family).

[Tanuki]

I look forward to CCHQ doing a similar awareness-raising of the inequity of Brown's stealth hike in the limit for NI contributions [aligning these with higher-rate income-tax] which comes in this tax-year and will hit typical middle-income-earners [policemen, office-workers, teachers etc] to the effect of nearly £1000/year.

[a-tracy]

I'm no expert on Tax credits but I believe that a single person can obtain tax credits if they are over 25 years of age and working for at least 30 hours per week. When the tax credit tables calculate benefits they ask for household income so I'm not sure if a single person living with their parents say earning £6.61 per hour for 32 hours £11,000 pa would be eligible or excluded because of his/her parents income.

However if parents income isn't taken into account you begin to understand why none of the single low earners can afford to rent with a partner and make their own way, as the partners income definately gets taken into account and the benefits end, if they jointly earn over about £12,000 pa.

[Chad Noble]

With the updated figures from the Adam Smith Institute;

Average Tax Freedom Day:
Under last Tory administration: 3rd June
Under this Labour administration: 29th May

Of course both figures are ridiculously too high, but old Harriet was right when she said that, on average, we have endured a lesser overall tax burden under Labour.

Cameron talks of 'lower taxes..' but just can't bring himself end it with the word 'overall' to actually make his aims meaning and measurable giving us 'lower taxes [overall]' instead of what he really means, 'lower taxes [here, higher taxes there]

[Paul Kennedy]

Just done some quick calculations myself using the full personal allowance:

A person earning £1,000 per month will be worse off by £4.26 per month

A person earning £2,000 per month will be better off by £15.74 per month.

As was mentioned the big hit on those on higher earnings is the substantial increase in the NI Upper Earnings Limit from £34,840 to £40,040

[stewart Geddes]

It is crazy that we tax someone on the minimum wage. Let's simplify the tax system George. Raise personal tax thresholds to at least minimum wage +10% and make the tax allowances fully transferable between spouses. Then you abolish the tax credit system and save a fortune in overhead that will more than pay for the changes,

This way people are left with their own money to spend and there is a strong incenntive to work.

[Joe James Broughton]

Passing leftie - we believe in letting people keep more of what they earn in the first place, not confiscating it and giving it back to selected groups in benefits.
As has been pointed out, your party has doubled tax on that particular band. Why?

[passing leftie]

For goodness sake, after you've applied the tax credits, almost every single person is better off. The headlines figures are meaningless. If you think that tax credits are bureaucratic and unecessary - by all means make your point (as some have done) but to lie and say people are worse off is dispicable. The poor have fared much, much better under Labour than they have under the Tories, and the whole point of tax credits is to provide specific help for people in specific circumstances, for example helping people with kids. I'd prefer something more straightforward myself, but this government is at least progressive and redistributive. To pretend that someone on £5000 a year is worse off is a disgrace.

These figures are lies, lies, lies and not at all what I've come to expect from Conservative Home.

[a-tracy]

Passing Leftie, as you say not everyone is worse off, however, I'm not sure I agree that a single person living at home should get tax credits, over a young couple trying to rent or buy their first home together but your priorities may be different to mine.

The part-time working partner in a childless relationship will be worse off so I can't see that they are lies. A part-time cleaner with a husband and grown up children will be the loser.

A typist and a baker without children trying to buy their first home together will be worse off too unless you know of another benefit they can claim to reduce their tax bill?

[passing leftie]

Passing Leftie, as you say not everyone is worse off, however, I'm not sure I agree that a single person living at home should get tax credits, over a young couple trying to rent or buy their first home together but your priorities may be different to mine.

No, I'm not saying that. I'm saying that nearly eveyone is better off. Pick your person, and look at the table.

http://extras.timesonline.co.uk/pdfs/budget2008taxtables.pdf

Only five income/circumstance brackets are worse off out 150.

The three bands of non-working couples who are worse off do seem to be anamolous, I agree.

[Malcolm Dunn]

'I'm saying that nearly everyone is better off'-Passing Leftie.
If the media reports of the meeting of the PLP with Gordon Brown are correct it would seeem that many Labour MPs disagree with you.

[a-tracy]

“Pick your person and look at the table”.

I did pick people I know from the table you identified and ‘nearly everyone’ isn’t better off. The categories that aren’t are quite large groups.

I believe we need to encourage young people to partner up, not live as continual subsidised children into their thirties, at which point when they finally do make the plunge and move in with someone their enormous new costs; council tax, rent/mortgage, utilities, television licence, puts their relationship immediately under tremendous pressure.

I worry that tax credits reward people who work the system – a young girl having a baby and living with her parents doesn’t have their income assessed to get full allowances as a single mum, she can have her boyfriend sleeping over three nights per week but they can’t make a break to set up a traditional family home together because they can’t afford to. This puts many family relationships under strain from the outset.

I know women who didn’t bank on having to help their teenage children with top-up fees. They didn’t have fifteen years to save up and don’t want their children saddled with £9,000 debts on top of loans for student digs and food costs once they start on their expensive journey to independence (they’d also quite like grandchildren), so the mums take on part-time jobs, their partners may earn £30,000 to £35,000 per annum (putting them out of tax credit brackets when her part-time income is taken into account) but they have the expensive mortgage and run a car and pay nearly £1,500 per year in council tax so any tax increase on them will hurt at a time that their compulsory purchase costs are going through the roof.

[passing leftie]

a-tracy,

I agree that tax credits are not always properly targetted. For example, why did the budget lower taxes for almost everyone rather than progressively targetting the lowest paid? Political expediency, unfortunately. This government has been redistributive, but far too timid about it. The main problem is that it's considered political suicide to even consider raising taxes at the upper end of the income scale, and somehow VAT doesn't seem as bad.

The kind of people that the government have been helping are unfortunately historically unlikely to vote, so as always, the rich get a disproportionate amount of attention.

People strenously object to council tax while paying the same amount in other taxes without complaint. But, lowering central government grants to councils is a prerequisite for the localism that you support.

The massive and unprecedented expansion of tertiary education has removed the ability for the government to pay grants, so that's become expensive.

The myth of the evil young single mother is pervasive amongst Tories, despite the fact that those numbers have been in decline (along with teenage crime rates) since the 70s, so I'm not buying that.

I fear I am veering of the topic, which is Tory lies and false reporting about the net benefit of budget changes to 5.3 million people. I am serious about this. It's the most misleading and underhand post I've ever seen on this site.

[Joe James Broughton]

Passing leftie, the point you can't get over is this takes more out of the pay packets of the poor - leave aside for a moment differing views on benefits.

It does nothing to improve incentives, or encourage people to take control of their lives.

It encourages people to stay in poverty.

I'm in favour of benefits for the poor who need help because they are struggling on low wages (and reducing help for those who won't work), but first and we should reduce their tax.

I'm also sceptical of your figures. It doesn't necessarily follow that every cleaner would be eligible for the extra benefits instead. There will be people who are just simply, taxed more.

[a-tracy]

I don't think single mother's are evil? Don't try to hang that one on me - I personally know young girls trapped in the situation I discussed above, if they move out to set up family home with their partner they can't afford to provide and they can't get low cost council housing.

I also know a couple of very young teen mums that had babies so they could move out alone and rent (totally subsidised), one doesn't work and the other got on a training scheme, with full child care costs covered and they see their boyfriends regularly as long as they don't move in together that's the key. I don't think they're evil - I think they're the smart ones.

I see your point that the budget will mean many more people not being worse off because they can claim tax credits, by going cap in hand to ask for some of their money back, please sir. I hope that you see mine. It will be interesting to get to the actual number of losers (including those that just don't know how to go about getting their money back, i.e. the numbers that are eligible to claim but don't).

I'm not sure I do agree with localism either, please don't make assumptions about me, what I have looked up recently though is that someone living in central London in a Band D home pays the same Council Tax as someone living in a band A home in Liverpool each year, that's bizarre.

But as you say I won't veer off topic and upset Tim ;-)

[figurewizard]

It's not just the low paid and the majority of pensioners who have been hit hard. Thanks to successive budgets between 2005 and 2007, a small company with profits of £11,000 will be paying 1110% more in corporation tax in 2010 than would have been the case in 2005. A strong economy calls for a strong small business sector, not one that is constantly being ripped off by its government

[Ollie Davies]

At a time of growing economic gloom and uncertainty, the current credit crunch combined with the sub-prime mortgage crisis will no doubt be worrying and influencing the finances of many families. As a party who revels in its commitment to the poor and continually reminds us that it is 'in touch' with society, hitting those who are worse of by the abolition of the 10p band, combined with increased fuel and road taxes and the inflation of basic commodities such as milk, it really does dismantle any credibility the government has to address the needs of those worst off and highlights the economic incompetence and mismanagement that has left Britain badly prepared for the potential economic storm.

[Philip Burt]

I am 57 years old and divorced. My two children are grown up and in no need of my support, having careers of their own. So effectively I am a single man. After a lifetime in full employment with HM Forces, Ferranti and until recently Standard Life in Edinburgh, I have been redundant and have taken early retirement, returning to Caithness where I was raised.

I have a new job ( not very well paid) in a supermarket and combined with a small pension my total annual income is £10500. Not a king's ransom you'll agree. I'm not entitled to any tax credits or, it would seem, any other benefits.

I am absolutely outraged that the Government has seen fit to make me poorer than I already am by abolishing the 10% rate of income tax.

It seems incredible that the Labour Party which is supposed to champion those less well off should take such a course. But then New Labour bears no resemblance to its former incarnation. It seems intent on looking after wealthy non-doms than people like me.

I have always voted for them but never, never again. I would have liked to have written to Gordon Brown but I'm not sure I'm allowed since he is not my MP.

I am not a "hard-working family". I am a hard working middle-aged single person. All I ever hear is families. I did raise a family. They're grown up.
There are many thousands like me who feel that no-one speaks for them.

[David Belchamber]

I think that, as with one or two other matters (e.g. confusing the CPI and the RPI and selling off gold at knock down prices), one could ask the PM: "was this done out of ignorance or deliberately?"

The conservatives should get in before a Labour rebel and put down an amendment to reverse the abolition of the 10p band.

[David Belchamber]

"Tax-the-poor Day" has got quite a memorable ring to it. Well done!

[Paul Kennedy]

The mistake was Chancellor Brown introducing the 10% tax band in the first place in 1999. It was tokenism and it has now come back to haunt him. Might have been better to take millions of people out of the tax system altogether by substantially raising the personal allowance. It is absurd that somebody on the minimum wage is a taxpayer...and I guess in many cases then also having to claim means tested benefits, talk about adding insult to injury!

[David Belchamber]

Paul Kennedy is absolutey correct in what he says. The whole thing is a nonsense.

Has CCHQ worked out what the the personal tax thresholds would now be if Brown had raised them in line with inflation (which inflation?) over the last decade?

The tories should pledge a large increase - at least for the initial threshold - and thus do away with a huge amount of benefits.

[Ian Lewis]

Today is also 'Tax the Tunnel' Day. The tunnel tolls connecting Wirral to Liverpool are up by 10p.

[pamela morton]

kWhat about us working pensioners? We are taxed to the hilt, either on small works pensions or on the part time earnings we strive for to try and make a decent income. I think it is utterly disgraceful the way the country is being governed at present but, alas, still worry that we will not fare much better with the Cameron crew. We definitely need higher personal allowances to both cut down on administration and also uitlise a simple solution to lower paid worker/pension poverty.