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Darling's Response To Revolting Back Benchers
“The Chancellor has acted to quell the discontent of Labour backbenchers over the abolition of the 10% income tax rate by announcing an amendment to the Finance Bill to compensate the lower paid by increasing the personal allowance by £600 for 2008/09.
As an extraordinary coincidence this has come just before the Nantwich and Crewe by-election.
Like most tax proposals this is not as simple as it appears at first sight. The actual mechanics are that the personal allowance (the amount before which tax is charged) will be increased by £600 from £5,435 to £6,035. This, on its own, would benefit every taxpayer even those liable at higher rates. To avoid this happening there is to be a corresponding reduction in the basic rate tax band by £1,200 from £36,000 to £34,800. This means that higher rate tax payers will pay exactly the same as before but taxpayers paying at the basic rate will be £120 better off (£600 @ 20% = £120).
This of course will rightly be welcomed by the lower paid but the more cynical may ponder why this was not recognised as an issue before the legislation was introduced in last year’s Finance Act.
It is also worth noting that it has taken MP’s a whole year to identify this (apparently urgent) problem and is indicative of the scant attention which recent Finance Bills have been given by Parliament. A more informed examination during a Bill’s progress through the Parliamentary process might serve to eliminate some of these ill thought-out measures.”
