Insights from the UK and beyond
Should the 10p tax rate have been scrapped?
A possible Commons rebellion by Labour MPs next Monday over the scrapping of the 10p starting tax rate has been averted but the episode has further damaged the standing of Gordon Brown.
In 2007, in his last budget as Chancellor, Brown abolished the 10p rate as he reduced the standard income tax rate to 20 from 22p and reformed National Insurance thresholds. Many backbench government MPs felt that hitting some of the poorest sections of the working population in such a way was an affront to their basic Labour principles.
Chancellor Alistair Darling at first rejected demands to compensate those worst hit, like the under-25s who earn less than 18,000 pounds or those who work fewer than 16 hours a week and who therefore do not qualify for tax credits. “I cannot re-wind the budget,” he points out.
But with local elections coming up on May 1, the need to head off rebellion was urgent.
Do you believe abolition of the 10p rate should ever have been considered by a Labour government?