Tax change brings criticism for Brown

Updated 10.03 Mon Apr 07 2008

Keywords: treasury, john hutton, income tax, tax, gordon brown, money, business

Gordon Brown is under fire again for scrapping the 10p starting rate of income tax.

The change came into effect on Sunday and virtually doubles the amount of tax paid by those earning less than £18,000 per year.

"This package of measures was voted on and debated last year" - John Hutton

The abolition of the 10p rate has made it possible to cut the main rate of income tax by 2p to 20p with tax credits to alleviate the impact on the poor, while funding further measures to reduce.

However, the Commons Treasury Committee has described the move as an "unreasonable" way to fund the Government's other priorities, warning it will affect low paid workers without families hardest.

The measure was announced last year in Mr Brown's final Budget as Chancellor and business secretary John Hutton has ruled out changing the system.

He said: "I really don't think it is possible to do that. We have made the decisions now on the Budget. This package of measures was voted on and debated last year."

The Treasury also rejected the committee's criticism of the Chancellor's growth forecasts.

A Treasury spokesman said: "The forecasts are not over optimistic and the Treasury has an excellent forecasting record and since 1997 has, on average, outperformed the independent consensus."

But Conservative leader David Cameron hopes backbench Labour MPs will rebel and force their party to overturn the changes.

Mr Cameron said: "I think every Labour MP should be thinking how can we help, with the Conservatives, and try to stop these tax increases going through at a time when people are finding it very tough."