Page last updated at 12:59 GMT, Monday, 21 April 2008 13:59 UK

Cameron vow to 'stop' tax changes

David Cameron answers questions about tax changes

Conservative leader David Cameron has vowed to "stop the government in its tracks" and make them think again over the axing of the 10p income tax band.

He said he would fight in Parliament for compensation for those affected by the "disgraceful" move.

Labour is facing a backbench rebellion over the axing of the 10p rate, as MPs return after a two week break.

The Treasury has hinted there could be measures to help low earners who are worse off, but not for several months.

It is thought to be considering raising the personal tax allowance for some of those worst affected by the change, but any reforms would not come into effect until next year's Budget at the earliest.

'Not good enough'

On Sunday, Chancellor Alistair Darling told the BBC it would be "totally irresponsible" to "unravel...or rewrite" his November Budget, but said he "would return" in future Budgets to help those worst hit.

EFFECTS OF TAX CHANGES
Winners:
Most people/ with incomes of 18,000+
Under 18,000 but aged 65+ and therefore eligible for higher personal allowances
Under 18,000 but with young children and therefore eligible for child tax credits
Losers:
Under 18,000 and ineligible for working tax credits because under 25
Retired early and therefore ineligible for higher personal allowances
Part-timer working insufficient hours to qualify for tax credits
Different personal circumstances may affect final amounts
Source: PWC

But Mr Cameron told the BBC that was "not good enough", adding: "I want them to help those people now and I am going to use every power I have got in Parliament to stop them and make them think again."

He said the abolition of the 10p rate - announced by Gordon Brown last year in his final Budget as chancellor as he unveiled a 2p cut in the basic rate of income tax - had been a ploy to grab headlines.

He stopped short of pledging to reinstate the 10p band if his party wins the next election, as he did not know how much money "there would be in the kitty".

But he added: "My chancellor would never introduce a Budget that singled out some of the lowest paid people in Britain and thwacked them with a great big tax charge. That's what Gordon Brown did and he should be thoroughly ashamed of himself."

Liberal Democrat deputy leader Vince Cable - who also wants compensation for low paid workers - said cuts in the main income tax rate should be "paid for by people at the top end of the income scale, not the bottom".

'Serious intent'

"Unless there's some sensible proposals to offset this I think there will be a major rebellion and we will support them," he told the BBC.

The Conservatives plan to table amendments to the Finance Bill - which will enact the Budget - proposing compensation for low paid workers through tax credits or allowances.

They are also considering backing an amendment by Labour rebel Frank Field, calling for a compensation package.

HAVE YOUR SAY
This extra tax is going to add more strain on my limited finances
Jim, Glasgow

Mr Field, a former minister, has said Treasury promises of "something undefined" in the future do not go far enough but stressed he did not want to "scupper" the Budget.

"None of us, as far as I know, are calling for a scrapping of the Budget, I don't think that that is serious politics," he told BBC News.

Government whips are thought likely to warn Labour MPs considering backing the amendment that any defeat on the Finance Bill would be seen as a vote of no confidence in the government.

But Mr Field said: "It is absurd to escalate it in this way. For some members of the government to blow this up into 'this will be a vote of confidence' - it is nothing of the kind."

More than 70 Labour MPs have signed Commons motions criticising the abolition of the 10p rate - enough to overturn the government's majority.

But it is not known how many of them will join opposition MPs when they get a chance to vote on the 10p tax band next Monday.

Strength of feeling

Mr Brown has already persuaded one ministerial aide not to quit over the issue and has offered reassurances to potential backbench rebels.

He referred to the "debate" about the 10p rate in a speech to the Scottish TUC conference earlier, stressing it must be seen in the context of other Labour policies which had boosted the income of pensioners and low paid families.

His spokesman refused to concede that people will be worse off as a result of the plans.

"When you undertake significant tax reform of the kind that was undertaken in the Budget, of course that's going to affect different groups in different ways," he said.

MPs will debate the Finance Bill in the Commons later, although there is not expected to be a vote on the 10p rate at this stage.

Ministers will also be able to gauge the strength of feeling in the Labour ranks when MPs gather for the regular meeting of the Parliamentary Labour Party on Monday evening.

The tax change means people who would have paid income tax at the lowest, introductory 10% rate will now have to pay the 20% rate.

It is part of a range of measures which came into force this month. Child benefits, state pensions and tax credits have all gone up.

The Commons Treasury committee has said childless, single people earning under 18,500 will lose up to 232 a year.




SEE ALSO
Tax changes: Winners and losers
21 Apr 08 |  Business
Darling's 10p tax options
21 Apr 08 |  UK Politics
Darling: I can't rewrite Budget
20 Apr 08 |  UK Politics
Miliband urges party unity on tax
20 Apr 08 |  UK Politics
Downing St denies 10p tax rethink
19 Apr 08 |  UK Politics
Labour tax revolt gathering pace
19 Apr 08 |  UK Politics
MP decides not to quit government
17 Apr 08 |  UK Politics
Pressure mounts over tax changes
08 Apr 08 |  UK Politics

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