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Doubt over 10p band pledge

24 April 2008
Categories: News , Income Tax
Government doesn't have money to help all people affected by abolition of starting rate, says expert

New Government plans to compensate those affected by the end to the 10p tax band have been met with doubt and cynicism.

The Prime Minister and Alistair Darling yesterday announced that the Treasury is to seek ways to quiet the furore ignited by the controversial Budget move.

The head of Grant Thornton's national tax office, Francesca Lagerberg, warned that remunerations are unlikely to be made to all low-income earners.

This is because the revenue earned by the Treasury from the abolition of the starting rate has been used largely to fund the reduction in the basic rate to 20p.

'The Chancellor's announcement showed intent, but fell far short of a promise,' she said.

'Therefore, it is unlikely that an individual suffering the worst of the effects of the abolition can expect to see the full sum of the loss returned to them.

'It is simply too difficult for the government to give back all of what it has taken and already spent.'

Liberal Democrat leader Nick Clegg directed his comments at Labour ministers who have so far been vocal in their displeasure at abolition of the 10p rate.

He urged them 'not to be bribed by the Government's last minute smoke-and-mirror promises'.

Mr Clegg claimed that the unspecified measures won't come into effect until November at the earliest, and will not help all of the millions affected by the original tax change.

He added: 'There has still been no commitment to ensure that all people made worse off by this tax rise will be fully compensated.

'Parliament should send a clear message that we do not believe that the poor should be targeted to pay for tax cuts for the better off.'

Sections - income tax and NI

Categories: News , Income Tax
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