Page last updated at 13:38 GMT, Monday, 7 April 2008 14:38 UK

Low-earners fear tax changes

By Jon Kelly
BBC News

Tax return form
Many workers on low salaries say they could lose out under the changes

Hoarding loose change. Always having to buy the cheapest groceries. Dreading the arrival of utility bills through the door.

Britain's low earners say their lives are already difficult enough.

But changes to the tax system could mean that making ends meet becomes even harder for many.

Under the new system, standard income tax has been cut from 22% to 20% and tax credits raised - but the lowest 10p band has been scrapped entirely.

The government insists many stand to benefit. But a Treasury Select Committee report has warned that households without children or anyone over the age of 65, and on incomes below 18,500 a year, would lose out by up to 232 a year.

'Very painful'

Nervously awaiting her latest payslip is Victoria Forester, 55, from Birmingham, who earns just over 11,000 as an audio typist.

She fears the reforms could be enough to break her already frugal budget.

To make up the shortfall, she says, she would have to give up the Nissan Micra she drives to work - even though her bad back makes walking any distance agonising.

I never thought I would see a Labour government penalise people in the lower pay bracket
Elizabeth Philips, Halifax

"It's very painful for me to walk," she says. "But if it's as much as I fear, I might just have to do it.

"As it is I always try to buy the cheapest own-brand groceries but it's never enough. I'd love a fresh wardrobe but I can't remember the last time I bought new clothes.

"I don't think it should be people on low incomes who have to pay more. It should be those with higher incomes - like MPs."

Her sentiments are shared by receptionist Kate Mason, 22, from Newcastle, who is on an annual salary of 11,000.

She says she is penalised because she earns too little to think about supporting a family, but as a result doesn't qualify for working families tax credits.

At the end of each month I'm scrabbling around looking for pennies
Kevin Davia

"Money is a constant worry for me," she says. "I keep a diary of which bills are due and I'm always checking my bank balance.

"Now I'm going to be even worse off. There's no way I can think about getting a mortgage or anything like that.

"This is meant to be a government for the ordinary Joe, but it seems to be hitting the poorest hardest."

'Corporate ladder'

Kevin Davia, 34, from Hitchin in Hertfordshire, says that he also has trouble making ends meet - a situation which will be made worse by the tax changes.

He takes home 13,500 a year working in customer support and says he has already been hit by rises in the cost of petrol, gas and electricity.

"As it is I have to dip into my credit card to pay the bills," he says.

"At the end of each month I'm scrabbling around looking for pennies.

"In business I think when people get so far up the corporate ladder they forget about the people on the bottom rung, and the same obviously applies to politicians."

Ministers say the changes will benefit millions. But that may be little comfort to those working on the breadline who feel they have been forgotten.

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