Thousands hit by Labour's tax grab, warns Beith

12.00.00pm BST (GMT +0100) Tue 15th Apr 2008

Alan Beith, MP for Berwick upon Tweed, has slammed the Government's abolition of the 10p income tax band, which has hit people on lower incomes disproportionately hard. On 6th April, Labour doubled the starting rate of income tax from 10p to 20p in the pound. Previously, a 10p rate was paid on the first £2230 of taxable income. As a result, instead of taking £223 in income tax on this portion of people's wages, Gordon Brown's government is taking £446. For those on higher incomes, this is offset by a cut in the standard rate of income tax from 22p to 20p in the pound.

Mr Beith said

"I have had many constituents come to see me, write or email, about the impact of Gordon Brown's decision to charge the full tax rate even to the lowest earners by abolishing the 10p tax band. Labour MPs are now realising that this decision, which in last year's budget so many of them welcomed enthusiastically, is grossly unfair but when I and other Liberal Democrat MPs voted against it, they voted for it.

"I will be challenging to Gordon Brown on this issue. A single person with no children earning less than £18,500 will be a net loser, by up to £232 a year.

People taking early retirement with a taxable income of less than £8,000 will lose, by up to £232 a year. The people with the least to spare are being hit hardest.

"Things have gone seriously wrong when Labour has pushed up taxes on people on low incomes to pay for tax cuts for the better off . "

Thousands of residents on lower incomes are now receiving sharply increased tax demands at the same time as the council tax bills are arriving. And many are facing big increases in bills for gas, electricity and transport. Liberal Democrat plans to cut the tax burden for those on low income include scrapping council tax and replacing it with a local tax based on ability to pay, and cutting the standard rate of national income tax by 4p in the pound, paid for by closing tax loopholes used by the wealthy and by increasing green taxes, such as the duties paid by the most polluting vehicles and those who travel in the most polluting aircraft.