The Prime Minister could face further embarrassment over the decision to scrap the 10p bottom rate of income tax as announced in the 2007 Budget, following this afternoon’s vote in the Commons.
The abolition of the 10p rate came into force in April last year alongside a reduction in the basic rate of tax from 22% to 20%. If today’s amendment is passed, ministers would have to produce proposals to ensure that no person will be worse off from the change.
The motion has widespread support from Plaid Cymru, opposition parties and Labour rebels. Plaid Cymru has called for people on the lowest incomes to be taken out of the income tax bracket all together.
In advance of the vote, Plaid Cymru’s finance spokesperson Adam Price MP commented:
“The decision to abolish the 10p tax rate is one that never should have been taken either. It is irresponsible that those from the poorest sections of our society are being penalised in this way.
“There is no doubt that thousands of people on low incomes are now worse off since this was introduced. It’s a crazy situation that should never been allowed.
“The Government’s initial clumsy attempts to compensate for this blunder by introducing larger personal tax allowances do not go far enough either.
“What should be happening is that these people are taken out of the income tax tier all together. They cannot afford to shoulder the burden, especially in these sensitive economic times.
“The controversy surrounding this motion is embarrassment enough for the Government. If they are indeed voted against by the opposition and by rebels from their own benches – then Gordon Brown faces another U-turn.
“This is yet another example of the Prime Minister being forced to backtrack because he isn’t engaging with the House or his own backbenchers.”