Brown facing fresh 10p tax fight

Rebels say millions of the lowest earners are still out of pocket

Prime Minister Gordon Brown could face a fresh backbench revolt over his 2007 decision to scrap the 10p bottom rate of income tax.

A group of Labour MPs - led by Frank Field and Greg Pope - are threatening to block this year's entire Budget in a vote in the Commons on Tuesday.

They say their amendment is also being supported by Tory leader David Cameron and the Liberal Democrats.

Rebels say millions of people on low incomes are worse off since the change.

'Toxic'

The decision to abolish the 10% starter rate of income tax was included in Gordon Brown's last Budget as Chancellor.

It came into force in April last year - alongside a reduction in the basic rate of tax from 22% to 20%.

The government headed off an earlier revolt last year - by promising compensation for those who lost out by the decision to scrap the lowest tax band, including larger personal tax allowances.

But the rebels say that at least 1.3 million people are still worse off by more than £1 a week, with more out of pocket by less than £1 a week.

"Although the amounts are small, the principle of poorer people losing out remains toxic," says BBC political correspondent Reeta Chakrabarti.

The rebels claim as many as 30 Labour MPs could vote against the government.

They say if their motion is passed ministers will have to produce proposals to ensure no person was worse off before the Commons would grant the Government powers to continue levying income tax.