by René Lavanchy
THE TUC has criticised Gordon Brown for increasing the burden on the low paid on the eve of his income tax reforms, announced last year, taking effect.
In his last Budget as Chancellor, Mr Brown announced he was cutting the basic rate of income tax to 20p and abolishing the 10p rate, effectively doubling the amount paid by people only paying tax at that rate.
Pensioners are unaffected, but taxpayers earning less than £18,500 and not in receipt of child benefit will lose up to about £230 a year, according to research by the Institute of Fiscal Studies, which also took into account changes to National Insurance.
TUC general secretary Brendan Barber said: “Many childless, low-paid workers will lose out as a result of these tax changes that come into force next month. Although the low paid have gained from tax and benefit changes since 1997, it is disappointing to see any tax change leaving a group of poorly paid workers even worse off.”
The Public and Commercial Services Union, many of whose members will be hit by the increase, also criticised the move. A spokesperson said: “It’s yet another whammy for civil servants which have had to endure below-inflation pay cuts. You’ve got the top earners, non-doms, and some of them are paying less than their cleaners.”
Last week’s Budget also announced that non-domiciled residents would face a flat £30,000 tax on income remitted to the United Kingdom after seven years’ residence, for the first time.
David Philips of the Institute of Fiscal Studies told Tribune that the changes to tax would not increase revenue for the Government: “This abolition more or less raised almost as much as the reduction from 22p to 20p.”
Working tax credits would counteract the effect, he added, but noted that many people do not claim them. Eight out of ten childless families are not receiving their entitlement according to recent figures.
It also emerged this week that there are 60 neighbourhoods – mostly in the north of England and in Wales – where most working-age adults are on benefits.
Figures from the Department for Work and Pensions compiled by the Conservatives show one area of Rochdale, Greater Manchester with 76 per cent of adults dependent on incapacity, carers, lone parents or income-related support.
Other high dependency areas are concentrated in cities such as Liverpool and Birmingham.
l A bill that would bar non-domiciled peers from sitting in the House of Lords looks likely to fail after Labour and Tory peers indicated they would not support it.
Justice minister Lord Hunt said last week that the bill, proposed by Liberal Democrat Lord Oakeshott, was right in principle but “not an appropriate vehicle to support”.
