I’m proud of our tax changes to help the poorly paid

16 April, 2013 No Comments

I thought Daniel Zeichner makes some interesting points on income tax (Cambridge News letters, 9th April). He quotes the Institute for Fiscal Studies (IFS) extensively, and is right to quote them saying that ‘the Liberal Democrat package would redistribute from the well-off’. That’s exactly the point – and is why we have ensured that the people paying the most since 2010, both in cash terms and as a fraction of their income, are the wealthiest 10 per cent of the population. That’s as it should be! 

He is also right to point out that lifting people out of income tax doesn’t help those earning less than £6,440/year. These people were already paying no income tax at all, and so cannot have their income tax reduced any further, whatever policy one adopts. However, the change still means that if they do manage to increase their income, they will keep more of the extra earnings. The IFS describe what we have done as ‘the most progressive way of cutting income tax’, which is exactly what I want to see. Daniel didn’t mention Labour’s new 10p tax policy, which the IFS describe as having ‘no plausible economic justification’. 

Anyone earning less than £10,000 will pay no income tax at all – 3.6 million people helped out. Someone earning £10,000 gets to keep £700 pounds a year – as does someone on £20,000 or £30,000. Times are tough, in the UK, Europe and USA, and I do not begrudge people being able to keep this money, which will make a big difference to them. We promised that if in Government, we’d lift poorly paid people out of income tax, and let those earning more keep £700 extra; we’ve done as we promised, and I’m proud of that.

 

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