How Brown makes the poor pay more tax
And widens the gap between the rich and the rest of us
LOSER: Call centre worker
Abolition of bottom rate tax band will hit a 24 year old who earns less than £18,000 a year, but must now pay £232 more tax a year
WINNER: Big business
Corporation tax has been reduced again – to just 28 percent – ensuring that Barclays’ £7 billion profits stay with the rich
LOSER: Pensioner
Like more than 1.9 million other people, a pensioner whose income is £6,500 a year pays more than 40p in tax for every extra £1 they earn
The government likes to talk big about how it is lifting “millions out of poverty” but the abolition of the 10p starting rate of tax speaks volumes about its real agenda.
Under New Labour the gap between the rich and poor has widened to a gulf. And Gordon Brown has continued the trend started by Tony Blair.
Taxation policy is one of the main ways in which a government can start to reverse inequality.
By setting low rates of tax for the less well-off and higher rates for the wealthy, the government could improve living standards for millions of people.
Yet Brown has committed New Labour to precisely the opposite. Some of the lowest paid workers in Britain are being punished by tax changes at the same time that corporation tax is being slashed.
Britain’s bosses, who are already lining their pockets with Brown’s handouts, are laughing all the way to the bank.
###
Brown’s tax changes hit the poorest the hardest
by Simon Basketter
Gordon Brown has declared war on many of his own voters by abolishing the 10p starting rate of tax.
While some of the poorest workers in Britain are now forced to pay hundreds of pounds more in tax, in the London boardrooms of the world’s richest companies there was joy as corporation tax was slashed.
This is Labour’s third cut to the tax on profits since 1997. Under Margaret Thatcher’s Tory government, corporation tax was 52 percent. This week Brown reduced it from 30 percent to 28 percent – the lowest of the G7 leading industrialised countries.
New Labour’s double standards make a mockery of its claim to be “lifting people out of poverty” and has sent a wave of anger among Labour supporters, even those who think of themselves as loyal to the party.
Millions of Labour voters rightly believe that the tax system should be used to help the poorest by redistributing wealth from the rich to the poor.
They think that those at the bottom end of the income scale should be paying a lower rate of tax, while those at the top should be paying the highest. This week’s changes reveal that Brown’s government is determined to do the opposite.
The abolition of the starting rate will hit young workers without families particularly hard. Those earning less than £18,500 a year stand to lose up to £232 a year – a lot of money when you are scrimping to put food on the table while paying the rent.
But it is not just the young and single who will be out of pocket. Around 1.2 million double income couples with no children and 700,000 double income couples with children will also be paying more. As will 300,000 women aged between 60 and 64.
Brown’s startled response to the political furore over tax has been to claim that his regime of tax credits and child tax credits will make up for the shortfall. But he knows this is a lie.
Lack of information and a cumbersome application process means that only 40 percent of those entitled to tax credits claim them – dropping to just a quarter of single people on low incomes. Those under 25 without children are not even eligible.
Those who do manage to obtain tax credits often find that they become caught in a trap where any extra money they earn can be wiped out by taxes.
The Treasury’s own figures show that 1.9 million people – including about half of all pensioners – whose income exceeds £6,500 a year are allowed to keep just less than 40p of every extra £1 they earn.
When the total of all deductions, including national insurance, are taken into account those people are paying rates of tax on extra earnings of between 60 and 90 percent.
This week’s tax changes will mean a million more people are caught in this trap. The number affected is equivalent to more than the population of Birmingham and Manchester combined.
However Gordon Brown’s world is full of stark contrasts. Multi-millionaire Labour donor Lord Sainsbury showed how New Labour is working for the rich. Last week he transferred most of his 8 percent stake in the Sainsbury’s supermarket to a company he controls, in the process avoiding a £27 million tax bill.
Yet even Brown’s new 28 percent corporation tax is too much for some top firms to bear. The top 50 companies in Britain have an average effective corporation tax of just 22 percent.
Already those at the bottom end of the economic scale are struggling as they pay a bigger proportion of their wages on essentials such as food and fuel, which have shot up in price.
By limiting pay rises for public sector workers to below inflation the government is making the pain far worse, creating a seething political anger.
Last week the Experian credit agency revealed that 5.1 million households are close to not being able to pay all their bills, including mortgages. Three out of four of those are in Labour constituencies. That’s around eight million voters.
No wonder that even the government’s junior ministers last week made “dangerous murmurings” about the abolition of the 10p rate of tax and the need for fairness.
However the “rebellion” was short-lived and government whips brought MPs back into line without offering the slightest concession.
The cold reality that most Labour MPs understand is this – loyalty to Labour means loyalty to Brown, and in turn loyalty to Brown means loyalty to the rich.
Have Your Say: How Brown makes the poor pay more tax
Please read our posting guidelines before posting.
Alternatively you can discuss this report here.
3 Responses to “How Brown makes the poor pay more tax”
-
Aldo
Posted: Apr 10th, 2008 at 7:46 pm
-
aid4families
Posted: Apr 12th, 2008 at 9:51 pm
Reply | Quote selected text | Link to thishttp://www.aid4families-aid4families.blogspot.com. I want all my UK peeps to understand that you are not alone…in getting sc%#$#*. This G-7 meeting was just to make sure that the central bank cartel is the sole global sovereign. I am an american in canada and this concerted global policy of lower taxes at the top and higher taxes(which includes regressive ones–sales, cost of living) is going uncontested. I built an organization that was eliminating class genocide and now find myself fighting the entire industry by being indicted. This means they plan to steamroll all opposition. In the USA, like UK and canada, we’re funding a war, while cutting taxes for the contractors that are getting rich off the war et plus this other staged economic 9-11 to get us to surrender a whole new level of rights.
-
R. Green
Posted: Jun 30th, 2008 at 7:06 pm
Reply | Quote selected text | Link to thisSir,
I’m 62 years of age and a pensioner,My pension is less than £10.000 pounds a year.since the Goverment abolished the 10% Tax, my Tax per month has gone from just under £40 to £60 per month. My oil central heating has gone up 100% in 18 months my council tax has gone up 20% this year,not to mention food/petrol/and other esential items.Can somebody in the Goverment explain other than the 40 or so labour MPs who pressured the goverment to make compensation to most but leave the likes of me and probably 500.000 other pensioners out of the 10% compensation. If someone has to lose best be them who have no” BIG CLUNKING FIST”. Don’t pensioners matter anymore.
Translations
Loading ...Related News
- Tax the energy giants and cut fuel bills
- McCain Betrays Himself By Defining Rich at $5 million
- Make Gordon Brown pay
- Why can’t energy firms pick up the bill?
- Gordon Brown faces ‘quit now’ calls as Labour MPs panic
Email This Page To A Friend
Latest Headlines
- VIDEO: Climate Camp 2008
- Conspiracy Files: Lockerbie
- A UK Window into CIA Abuses
- More People are Catching on to Corporate Media Lies
- Bisphenol A Chemical in Plastic Bottles Harms Children, Feds Conclude
- Class War Bonfire Night 2008
- US out of Iraq by … “2011″
- ‘MI6 & Weapons of Mass Destruction’
- RIPA Surveillance Law Misused On Merseyside
- Britain: Security Service “facilitated” torture of Guantánamo detainee
More Breaking News
Archive
Lets be honest Neo Labour are screwing the working man senseless, the good news is they are in for a summer of discontent, most of the UK working class will be looking for wage rises of 10% or more.