Labour MPs “dismayed” at the effects of Labour tax policy

The Guardian reports on the growing rebellion among Labour MPs as the full impact of the removal of the 10% tax band in last year’s budget becomes clear:

In what were described as tense exchanges, the prime minister was challenged over the issues when he addressed backbenchers in private at the regular meeting of the parliamentary Labour party this week.

Now 26 Labour MPs, including former ministers Janet Anderson and Gisela Stuart, have signed an early day motion saying the tax changes will have “a disproportionate impact on people who can ill afford to be made worse off”.

An IFS economist, quoted in the same article, says that of the 5 million households who will lose out by the changes, “a fairly large number” will not be compensated for the losses in the form of tax credits.

People earning below about £18,000 will see their take-home pay decrease from next week.

UPDATE: And it’s a double whammy of dismay as licensing minister Gerry Sutcliffe says the publican trade is “right to be upset” by the recent budget’s increases on alcohol taxes.

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  • Alix Mortimer 3rd Apr '08 - 5:37pm

    I should also have added this “I told you so” from Vince Cable last year:

  • Andrew Duffield 3rd Apr '08 - 6:38pm

    What a pity we don’t have a tax policy that would reverse Labour’s disgraceful attack on the low paid – particularly young, single workers. On the other hand, what an opportunity for us… if only we could think of a way of taxing the unearned wealth of the property-rich “haves” so removing minimum wage earning “have-nots” from paying tax on their productive contribution to the economy altogether – taxing wealth, not work…

    Far too difficult I expect; it would probably take a hundred years to come up with something that practical, progressive and popular.

  • Alix Mortimer 3rd Apr '08 - 6:49pm

    Er, Andrew, we do. Apart from LVT, I mean. Let’s not cut off our nose, now!

  • Andrew Duffield 3rd Apr '08 - 7:41pm

    I think not Alix. It is certainly one of our many “longer-term goals” to take those on NMW out of tax, but exactly how we do it has yet to be resolved. All I know is that wealth gap keeps on growing!

  • Liam Pennington 4th Apr '08 - 8:03am


    Pope, Greg
    The Status of this EDM is Suspended.

    I wonder for why….

  • David Morton 4th Apr '08 - 9:06am

    Mark is right and has put it much better than I will. Objectively a person on benefits in a one bedroom flat in a Tower block in Leeds is “wealthier” than henry the 8th was. Think about the electricity, central heating, calorie intake, TV, radion, libraries, internet access, health care, life spane etc.

    But I doubt they feel it. There is ample evidence that the most unequal societies are the most violent, crime ridden, mentally and socially stressed. WE are social animals and the gap between extremes and how easy it is to travel in that gap is enormously important to self esteem and any sense of social contract.

    Its the biggest contradiction in my liberalism. All my instincts are to say set a fair playing field and let everyone get on with it and if david becjham does the best then so be it. But the disparities are no so extreme that some sort of intervention is necessery.

    Thats why (puts tin hat on and runs for cover) I have always been quite sympathetic to the Baby Bond scheme. Yes some people will blow it all on gas/booze/coke/a month in Ibiza but it is at least a genuine attempt to address asset inequality.

  • David Morton 4th Apr '08 - 11:35am

    Well Yes and No. I’d love the social outcomes of the Nordics its just I can’t quite bring myself to support the levels of tax to pay for it. We are after all confiscating personal property (income) on pain of inprisionment. I’ve always struggled slightly with that part of the preamble because I suspect the price of complete liberty will always be some inequality. And forced to choose between liberty and equality I’d pick liberty because I don’t trust the state.

    God i’m not normally this Philosophical.

  • Mark Wright 4th Apr '08 - 1:44pm

    Julian, isnt it self-evident that the bigger the gap between states the harder it is to transition from the lower state to the higher state? This is a principle of physics, which is surely reflected in the real world.

    Regarding BMWs and Lewis Hamilton, yes clearly what matters is what people see during their everyday lives. What is probably more significant to people is not the bloke down the road with a nice car, but the comparison made by people who live on the decaying Council sink-estate as they travel on the bus through the neighbouring suburb of fine Georgian Houses.

    Many British cities have deprived areas cheek-by-jowl with wealthy areas. Those in the wealthy areas try not to look at the other estate, and hope the wind is blowing the right direction. Those in the deprived areas note that the police respond to calls much faster elsewhere, that graffiti is cleaned immediately when on a Georgian building; that all the local schools are crap, while over there they are excellent; that groups of drunk youths are never tolerated over there; that life expectancy is 15 years longer over there; etc…

  • Hywel Morgan 4th Apr '08 - 5:00pm

    “Apparently ministers are going to reconsider the impact of the 10p decision “especially on pensioners aged 60-65″.

    So if you’re young, poor and childless you can still go screw yourself, seemingly.”

    One of those groups votes, the other doesn’t – hence government policy favours those who vote.

    It would also be fair to say that there are a lot of very comfortably off people in the 60-65 age bracket (and maybe a bit higher) who benefitted from high stock market growth, decent annuity rates, the rise in property prices and the wider provision of final salary pension schemes which were much more amenable to early retirement a few years ago.

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