Page last updated at 10:59 GMT, Sunday, 6 April 2008 11:59 UK

'No rethink' on tax rate - Hutton

John Hutton
Mr Hutton acknowledged there were concerns over the new rate

Business Secretary John Hutton has ruled out a rethink on the decision to scrap the lowest tax band, amid claims Labour has abandoned low-paid workers.

He said he did not think it possible to go back on a decision to scrap the 10p rate, despite Labour MPs' unhappiness.

Lib Dem leader Nick Clegg told the BBC it was a "cheap political stunt" to allow a 2p cut in the basic tax rate at the expense of the poorest people.

Mr Hutton said the move had to be seen as part of a wider package of tax cuts.

From Sunday standard income tax is being cut by 2% to 20% but the lowest 10p band is being scrapped entirely.

'Outrageous stunt'

Mr Clegg told the BBC earlier : "Over five million of the poorest people, it's estimated with incomes between 5,000 and 18,000, are suddenly finding their starting rate of tax is doubling, why?

"So Gordon Brown could offer a 2p cut in the rate from 22p to 20p for the following day's headlines. I think that is an outrageous political stunt at the cost of the poorest in British society."

Overall it can't be disputed that people on low and fixed incomes are significantly better off
John Hutton
Business secretary

Last week Mr Brown said he would look again at the impact of the changes - announced in last year's Budget - amid fears of a backbench revolt over the decision.

But Mr Hutton told BBC One's Andrew Marr show it was not possible to go back on the change.

"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," he said.

Minimum wage

He said the changes were part of a "balanced package" which had cut the main rate of income tax and which left families with children "significantly better off".

For those who were worse off, he said: "We are talking in the worst case scenario about half a per cent of net income being the scale of the maximum loss that someone might have."

He said changes made by the Labour government over its 10 years in power had meant low income families were about 10 a week better off and other changes - like the introduction of the minimum wage - had benefited people on low incomes.

"Overall it can't be disputed that people on low and fixed incomes are significantly better off," he said.


He acknowledged there were concerns that had been raised with ministers, adding: "Obviously it is right and proper that ministers engage in a debate with our concerned colleagues about this."

Later Conservative leader David Cameron told Sky's Live with Adam Boulton the Budget had not been "right" at a time when British families were "finding it tough".

"My response to the Budget was don't kick people when they're down and we voted accordingly in the Commons."

Other changes announced by Mr Brown while he was still chancellor of the exchequer include new rules for "non-domiciled" taxpayers - who live in the UK, have international wealth but are allowed to only pay tax on UK earnings. They will have to pay 30,000 annually, or else declare their total worldwide income to be taxed in the UK.

Capital gains tax is to be set at a flat rate of 18%.

The Confederation of British Industry (CBI) has also criticised the government for penalising business with tax rises in the Budget, which it says will harm the economy.

Taxes on alcohol are also rising - prompting criticism from licensing minister Gerry Sutcliffe in an interview with a pub trade newspaper last week.

He later backed down, saying the comments "do not reflect my views".

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