Would you like the 10p tax rate back?
Our friends across the water narrowly avoided the so-called ‘fiscal cliff’ a few days ago, but 2013 is going to be a much harder year financially for many of us here in the UK because of changes to tax and benefits brought in this year. Could harking back to an old policy actually help us out?
Of course, when talking about people facing hardships, we are not talking about those losing their child benefit next week, as people earning over £50,000 are by definition not ‘struggling’ whatever they care to believe. They should also be intellectually capable of completing a tax return should the need arise. No, one of the Conservative party’s main aims in this parliament is in ‘addressing’ the welfare state. Iain Duncan-Smith and his cronies are in no doubt that the scroungers need a wake-up call, and what better way to do so than to remove their benefit ‘crutch’.
Admirable in theory, and no-one likes to think of piss-takers sucking up your hard-earned tax dollars while they sit at home at watch premium satellite TV channels all day long. And there are people who do this- just as there are thousands of people whose benefits will be cut who are doing exactly the opposite. Some commenters suggest the number of people who claim benefits while working is as high as 60%. Is it fair that these working people lose out to catch the scroungers, when they probably earn little enough as it is?
A new policy suggestion has been gathering momentum from within a surprising organisation. The Tory party itself. Robert Halfon MPs blog on the Conservative website today advocates re-introducing the 10p starting rate of tax “which Gordon Brown scrapped in 2008”. He fails to mention that Gordon Brown also introduced the lower rate back in 1999. Mr Halfon, who is something of a professional ranter within the party (he holds the world record for number of Members’ bills introduced. Probably) suggests that the £6 billion cost of having a 10p band between £9,205 (the current personal allowance figure) and £12,000 could be funded from the ‘additional’ tax the country will get by dropping the top rate of tax from 50p to 45p. After all, getting more tax in is why they did it, isn’t it? There’s even a catchy campaign- cuttaxto10p.com with an online petition- although you’ll have to be quick, at the time of writing there were 6 whole signatures on it.
But, joking aside, could this be an answer? People who aren’t working would presumably have no need of a lower band, so it would only benefit those in work. It would also tie-in with the coalition aims of raising the personal allowance but at a much lower cost (raising the allowance to £12,500 has an estimated cost of £14.4bn) and is less likely to hit the squeezed middle so much. As Harry Phibbs put it (quoted in Paul Goodman’s official conservative blog last month), if Chancellors didn’t keep adjusting the level at which the higher rate (40%) applied, no-one would be paying higher rate tax until they earned over £60k; this creep downwards is something George considers a virtue.
So if it seems reasonable and logical, what are the chances of getting a 10p rate back? Conservatives have already relied on the fall back position of “adding complexity”, although most taxpayers would probably rather an extra rate if it meant paying less tax, even if they had to do one extra sum. James Bloodworth, writing in The Independent suggested that the Tory party “believes with its heart and soul that rich people will not work unless they are given money, whereas poor people will only do so if they are not. Being “tough” on benefits is also more important than being correct about benefits.”
Would a 10p rate be a people-pleasing policy? Of course. Is it likely to happen? Not unless poor people suddenly become more important to the Tories than rich people…