That 10% tax band proposal

The members of what passes for the Labour Party’s Brains Trust (no laughing, please) have finally, possibly, maybe, made some marks on that blank piece of paper and come up with a policy. Not a new one though but a rehash of an old one: a 10%* tax rate.

The details provided are sketchy but the press is reporting that it would apply to the first £1,000 of taxable income, in contrast to the previous incarnation which applied to the first £2,500.

However, whilst I am very much in favour of governments stealing less money, this ‘policy’ is about as pointless as when Millipede Sr and Dave Prentis called for the Living Wage.

As a result of this policy, basic rate taxpayers** would retain an extra £100 of their salary each year. Oh, be still my grateful heart!

The current government, as useless as they are, have raised the personal allowance (PA) from £6,475 in 2010/11 to £9,205 in 2013/14 – an Income Tax (IT) reduction for basic rate taxpayers of £546 a year.

Raising the PA to £12,070.50 (37.5 hr week at the National Minimum Wage) would save everyone a further £573.10 in IT alone.

Sorry Eds but this policy can only be described in one way: #fail.

* Or 35% once National Insurance is factored in.

** No doubt the threshold for the 40% IT band would be reduced by £1,000 at the same time.


  1. Blue Burmese says:

    That’s not to mention the way they would fund it; a tax on all houses worth over £2M. If that’s the criteria then they’ll have to revalue a good chunk of the UK housing stock with the inevitable challenges that would follow. Sounds grossly inefficient to me.

    • Misanthrope Girl says:

      Not to mention the inevitable devaluation which will occur as those around the £2M mark will decrease in price.

      • john77 says:

        Theoretically it should have no impact on a house valued at £1.999 million but the price of a house previously valued above £2m depends upon the discount rate and the dates of future general elections. In reality, the fall in price of a better house must affect the price of houses just below the £2m threshold/
        Any of us might say “Why should we care?”: because no man is an island
        When my grandmother died her net income was negative, although she was living in a house now valued near £1m. If my great-grandmother had chosen to move to Kensington instead of North London after her husband died, then her heirs could have been faced with a tax charged against income of less than zero.

  2. bunny says:

    Utterly bloody useless, one hundred pounds will not make a difference, now cutting VAT on fuel and petrol, now that would make a difference.

    • Misanthrope Girl says:

      Cutting Fuel Duty (which is added before VAT) would certainly make a difference to all as business costs would drop.

  3. john77 says:

    Obviously this will help Ed Millionaireband more than the poorest. The best way to spend any money raised from a mansion tax (in itself intellectually flawed) would be a raise in the threshold for income tax or National Insurance, preferably the latter, since the whole of the gain goes to those above the new limit for the 10% band but those in the 10% band only get part of it.
    Why does New Labour work so hard to help the rich rather than the poor? As a card-carrying member of the Conservative Party I have been arguing for decades for a rise in the income tax threshold, offset if necessary by a rise in the marginal rate of income tax, while Brown and his two Ed’s acolytes have worked to reduce the marginal rate of tax on investment income while increasing the differential between that and tax on earned income. Under Churchill, Eden, MacMillan etc working men paid less tax (at a lower rate) than the rich living on investment income; under Blair and Brown they paid tax at a significantly higher rate.
    PS Having worked bloody hard for forty years I should be financially better off under Millionaireband, but I have some principles.