Labour's tax plans hit those on low incomes

9.59.00am BST (GMT +0100) Wed 16th Apr 2008

Another Labour tax rise

Commenting on Labour's decision to remove the 10p income tax, Norwich Liberal Democrat Leader, Brian Watkins said it will hit those on low incomes.

He said:

"The Labour government's decision to remove the 10p tax rate shows just how out of touch they have become. With rising fuel bills, higher council tax, an uncertain housing market and a general rise in the cost of living, Labour has abandoned the lowest paid at the very time they are most in need. Labour has doubled the starting rate of income tax from 10p to 20p in the pound. The removal of the 10p rate leaves around 5.3million at the bottom of the income scale facing higher bills.

Households without children, or anyone over 65 on incomes of under £18,500-a-year, will lose out by as much as £232 a year.

Around a third of our armed forces will also be among the hardest hit. Those up to level three private rank or equivalent who earn an average £14,349 to £17,111, will be worse off. The Liberal Democrats believe that this is a disgraceful way to 'reward' our armed forces for the fighting they are doing in Afghanistan and Iraq at this Government's behest. This tax increase hits people like nurses, soldiers, teaching assistants, primary school teachers, pensioners, part-time workers and young people starting their careers. It is a disgraceful decision and it is thoroughly misguided.

We now have a Labour government that has pushed up taxes on people with low incomes to pay for tax cuts for the better off. The cut in the standard rate of income tax from 22p to 20p is being funded by those on low incomes. In Norwich we have significant levels of deprivation, and Labour's tax policies will come as a cruel blow to those who already find it hard to make ends meet. Labour is robbing taxpayer Peter to pay taxpayer Paul. It is a damning indictment of their record that the gap between rich and poor has grown so markedly during the past ten years.

The Liberal Democrats want to see the overall tax burden reduced by cutting the standard rate of income tax to 16p, paid for in part by new green surcharges. We would also abolish the unfair council tax and replace it with a local income tax based on people's ability to pay. I believe that these proposals would represent a positive step forward in the difficult economic climate the country now faces."