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Gordon Brown defended his Budget yesterday against accusations that the lower paid had been singled out for punishment and that he had “spun” it as a tax-cutting package.
As the Institute for Fiscal Studies suggested that fewer than half of households would benefit from the Budget and its headline cut of 2p in the basic rate of tax, critics suggested that Mr Brown was not only hitting millions who earned less than £18,000 but subjecting them to a complex array of papers before they could claim tax credits in compensation.
All workers will pay an extra £220 when the 10 per cent starting rate of tax is scrapped next April. The Treasury says that many low earners will be able to offset this cost by claiming increased tax credits — but a third of people entitled to claim working tax or child credits do not do so, according to the Treasury figures.
Those who do have to wade through a 12-page note and 60-page explanatory form.
Leftwingers voiced concern that the tax changes had left the better paid largely unaffected while hurting Labour’s traditional constituency.
Lynne Jones, Labour MP for Birmingham Selly Oak, said: “I think we have to some extent neglected poorer people who have no children. I think that’s a cause for concern. It is something that needs to be put right in the long term because there are people who are single who are struggling on low incomes.”
Lord Desai, a Labour peer who is an economics professor, suggested that tax credits would reach only 85 per cent of those who should have them and were too “fiendishly complicated” to be understood.
According to an opinion poll, almost half of all voters believe they will be worse off as a result of the Budget, despite the cut in the basic rate. The YouGov survey for The Daily Telegraph found that 48 per cent believed they would be worse off; fewer than one in five thought that they would be better off.
George Osborne, the Shadow Chancellor, used the row to attack Mr Brown’s credentials to be Prime Minister. “If you want to know what this Chancellor would look like in No 10, look no further than yesterday’s Budget,” he said. “Stealthy, sneaky, unable to tell the truth. He’s not the man who can restore public trust in government because he’s the reason people don’t believe a word they say any more.” He challenged Mr Brown to admit that his Budget would leave 3.5 million families worse off. “There are winners but there are also millions of losers,” he said.
Mr Brown said that his tax reforms had simplified the system and were “in the best interests of the country”. He told BBC Breakfast that the average family would be £5 a week better off as a result of the income tax changes. He denied that lower-paid workers would be worse off, saying: “For people who are lower earners the tax credit wipes out the income tax liability and that’s why lower income workers are better off now as a result of what we have done as a Government.”
Asked about Lord Turnbull’s allegations that he had “Stalinist” tendencies, Mr Brown said that some civil servants had been upset by “difficult decisions” he had made, such as keeping Britain out of the euro.
Throughout his interviews yesterday Mr Brown adopted the softly spoken delivery that is becoming customary as he prepares to take over as prime minister. He emphasised that he was not out of touch with the public. “I’m a family man with two young children trying to do the best by them. I do understand the challenges that families all over the country face with young children,” he said. He also promised to be inclusive, meeting one of charges levelled regularly against him.
The Institute for Fiscal Studies said that a fifth of Britons, about three million households, would lose out from the Budget, confirming the Treasury’s own admission that one person in five would do so. Of the rest, two fifths of people should see some gains, mainly very small, while a further two fifths will see little effect at all.
The main winners identified by the institute will be out-of-work parents; couples with children where one parent works; and those who earn £18,500 to £39,000, as well as over65s who still pay tax. Losers include single, childless people who earn less than £18,500; two-earner families who do not claim tax credits; and women aged 60 to 64 who pay tax.
Mr Brown came under fire over the effect of the Budget on charities that use Gift Aid. In 2004-05 they claimed back £620 million; under rules to be introduced next year that would have been £550 million.
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will be starting workin a few weeks and its a low paid job bt gets me of the benefit systems it will pay me 5.35 per hour and I would work 37.5 hours per week that would give me £199 gross that would be £171.75 net I have been told I would get a working tax credit I would then get £201.12 a week . I am single 35 and live alone so would be liable for coucil tax of 857.72 per year. I have a mortgage that cost 499 per month and montly council tax would still have to be paid. every month I will get 804.48 to pay both these two bills so I am left with £58.62 per week Ive also work 4 miles aways so unless I walk its £2.00 per day to get there.so it will leave me £48.00 per month
I am really in a mess I have worked since leaving school and it has never felt so difficult if I do not qualify for a rebate what are the other options I currently get job seeker benefit £60 per week so working I get less and have council tax to find it just does not makes sense if you have any advice I am
emma, yorkshire, huddersfield
Yet again this chanceler has prettened to cut taxes while doing the opposite.What I feel about this government an its utter contempt for ordinary working people is unptintable.I will however have to wait for a general election to show my disgust.
John Frak, Swindon, UK
And what about the woman of 62 with a State Pension just less than the Personal Allowance and Building Society interest just more than the 10p Tax Band. I currently submit a Tax Return to claim back approximately £200 each year. When this goes in 2008/09 there will be a 2.86% reduction in my income. Is this a record?
Jean Hemel, Leeds, England
Why does Gordon Brown not see what he has done. Not everyone on low earnings, from maybe pensions etc, can claim tax credits. Those that can't will have tax taken from them to give to those earning over £31000. Even the analysts can't understand why he has done this.
In fact no one would need to claim anything if the personal allowance was increased substantially thereby negating the cost of running a ludicrously bureaucratic system.
Someone, somewhere, if not our government (obviously) must see common sense.
This is becoming totally ridiculous.
I would also like to ask where is the Lyons report on council tax which came out on the same day as the budget (wonder why).?
Janet Rhodes, mold, Wales
If I understand the proposals correctly,a couple both earning low wages who currently pay a top rate of 10% will now each pay a top rate of 20%. If they have no children they will not Qualify for tax credits. How can a socialist chancellor introduce such a measure? Why is it necessary? Gordon Brown and any members of the party who vote for these proposals are turning their backs on the people they should be protecting and imposing massive financial discentives to low paid workers. It is not too late to repent!
David Morris, hereford, UK
So Brown is a family man with two young children is he? He forgot to mention that he has an enormous salary (unjustifed) and will have a pension that none of the rest of us can even dream about. How can he say that he understands the problems of the low earner or pensioner who will have to pay 20% tax on the first £2150 instead of the 10% that he is paying at the moment when, even without paying tax, he would be living on the the breadline.
Richard, Alicante, Spain
I am a widowed pensioner. I have DSS pension of £4,970 pa. soon to be about £5,170. My Council Tax increase takes the increase in pension away. I have a company widows pension of £2000 pa approximately. They claw back 50% of any increase in rent on my tied cottage. I am paying tax @ 10p in the £ after personal allowance. Tell me how I will be better off paying 20p in the £ as I didn't see any increase in personal allowance? My useable income has fallen by 50% since my husband's death 15 months ago. My pension is half the Incapacity Benefit and Mobility Allowance he received, and I get half of his company pension as Widow's Benefit. I do get 25% reduction in Council tax but his year they want £112 a month to empty a dustbin. No street lights and pavements here. You jump onto the mud at the side of the road if a car approaches. With the increase in Gas and Electricity I am using up my savings fairly rapidly. I wish I could afford to relocate abroad.
B.P.Russell, Windsor, England
Polls prove that a lot of people have'nt the ability to think for themselves.brown is robbing the poorest to gain middle class votes.The man is a confidence trickster and this Budget could be one trick too far.
Michael Rigby, Blackburn, England
My husband and I earn £30,000 between us and we have a huge mortgage, 3 children increased bills, increased council tax so I asked my work to go full time which means I'm out of the home at 7.40am and will only get back home at 4.30pm but in order for me to go full time I need my children to be looked after before and after school and of course holiday time which these kids seem to be more off school than at school , it will cost me in the holiday time £18 per child per day, work that out over the long holidays and then about £2.50 - £3.00per hour per child during school term, I worked it out to roughly £75.00 a week just for my children to be looked after before and after school, so I phone the tax credit people to see if I could get any kind of help and of course the answer was no, so my question is this the government want all mothers working how do they expect this to happen when the money they get will go on childminding costs it really isn't worth it.
vicky, southampton,
Married 52 & 47, Husband fell sick in Nov 06 still on SSP of £70.10, a week, wife had to give up work to care for husband. Wife doesn't drive, Husbands driving leceince suspended because of illness (brain hemmorage) Income Support of £20.10, total income of £90.20. Admitively rent & Comm Charge paid. Leaves us £10.25 for food or bus fares.
This is your caring government for married working class couples.
Benefits should be based on your past Nat Ins contributions not how many children you have.
There is a minimum wage, everyone should get the eqviment of the mimimum wage, tax should not be takenfrom this basis amount. Start with a level playing field then if you want children fine, be in a relationship and then you can afford them, pensioners should get there topp up pensions if theyv'e paid for them, theyv'e already paid tax on their savings after all.
Councils should be for number of constituants and set at a price per population and devided.No more post code lottery
Carol Liddle, Wigan, UK
I don't agree with the budget at all. What gordon brown is doing is just helping the rich get richer including him and the poor are just getting poorer and not gaining anything from this budget.
This budget is his way of getting the higher paid over the 38,000 threshodd to vote for him to become prime minister. I just don't trust Gordon Brown at all his promises are just empty and a lot of lower paid working class people probably feel the same way as I do. I DEFINETLEY WILL NOT BE VOTING FOR HIM.
Mrs A Kaur, West Bromwich, West Midlands
Up unto November last year both my husband and I were both working and had no children living at home. My husband had a seroius accident at work and has been unable to work since, I have had to stop work to look after him. Yes our rent and com. charges is paid for by benifit. However this caring Government says we only need £90.20 to live on. After paying our gas, water,electric and Tv Lecience we are left with £10.25 a week for food, bus fares to hospital for my husbands physio? We are married and in the twenty seven years of marraige, my husband had only ever been out of work for seven weeks, and I have never claimed anything.We are still a family with working values. But this is the help and thanks we get.
Now to get on you need to have children to get extras, or be a pensioner. My husband and I won't live to be pensioners we can't afford to get better or eat. And this budget did obsolutely anything for us.
Carol Liddle, Wigan,
Nothing for the Disabled or chronically sick. I am on Disability living allowance, Income support and incapacity benefit.
Total of £135 P.W. to live off. The DLA pays for carers.
So... as I am under 60 (I'm 36) I get no winter fuel payment, despite many lobbys via all the partys over the last few years. This would at a stroke have been the gift to the disabled that was needed, and has been promised over the last few years. Mr Brown: I speak for all young disabled people and say we are very, very dissapointed.
Philip Harkins, London, London, UK
Herr Brown stikes again !! he is a master at making simple things complex, and making complex things (mostly made complex by him) even more complex.
It is his need to use "smoke and mirrors" to disguise his increasing the tax revenue to the government.
He has done nothing for low earners and those on fixed or limited incomes, and yet turns a blind eye to tax evasion by those with high incomes and lawyers, accountants etc to help.
M.B, Cambridge, UK
Gordon Brown had to be found a safer seat (Kirkcaldy), here in Scotland, so that he would have a chance of staying in government, but how safe will he find that seat when the Election comes round - everyone I speak to in the area has had enough of Labour and will vote for any of the other parties just to see Brown go. Do we really want a Scottish Prime Minister, anyway? I'm English, by the way.
Neville Wake, Kirkcaldy, Scotland
As a single, childless, first time buyer who's already struggling to make ends meet with the hike in interest rates this is one kick in the shins I really didn't need.
What should I do? Go knock up the next girl I meet for a little tax relief?
Give the young and single a break.
Ed Wetherell, Cambridge,
I am 65 years old and retired with a state pension and a relatively small occupational pension. Even with the increase in personal tax allowance I am set to lose around £180 a year. Fair enough if this shifty chancellor had actually come clean about his so-called "cut" in income tax instead of resorting to the triumphalism he showed on budget day as he proclaimed his own genius. Robin Hood is alive and well and he appears to have changed sides.
Neil Levick, Ashford, Kent
Gordon Brown, in my opinion, is the ultimate master of deception. His first act was to plunder personal pensions (many billions of pounds), stopped repayment of tax credits on share dividends, he has sold the bulk of Britains gold reserves and squandered aimlessly billions on the NHS and education. Has education or the NHS been improved by this profligate spending? The honest answer is NO! Did you notice his 'Fagin-like' wringing of hands during his speech? Unfortunately, he robs the poor to make the rich wealthier! Hopefully he will reap his just rewards come election time!
R.B., Leicester, UK
Single people, whether pensioners or not, are the soft targets for subsidising everyone else in this country.
A J McCabe, Doncaster,
Mr Brown has never done anything for middle aged widows who don't even have a widows pension, because he stopped that six months before my husband died in 2001. It's awful to have to look forward to becoming sixty in order to qualify for the state pension to gain income. I am unable to work, also I don't have any children. The Chancellor doesn't think of widows,.Hopefully the heating allowance will still be available when I reach sixty,,,,another reason to look forward to reaching that age.
melanie, Kent, UK
Brown understands the problems of families with young children? if they have his level of income they can't have many. Inclusive? Arrogant men are NEVER inclusive - they have a God-given belief in themselves and no one else.
Why do British politicians even bother to open their mouths? Surely by now they must realise that we don't believe a word they say.
Tony Jones, Grantham, UK
As a 75-year-old non-earner, I find that when these new tax rates come into force I will be paying twice as much tax as before. Goodbye Gordon!
Alan, Llanerchymedd, Anglesey
Both my partner and myself earn about £12k each and have no children, we struggle to pay the rent and keep the car going. We always seem to get hammered by the Govt & they never do anything to help us.
Tax credits are a nightmare to work with - I had some once, but then later on they clawed it all back off me. Years later, I am still paying it back to them.
Anthony Smales, Beverley, UK
Thank you Mr Brown, as a childless couple where only one partner works and is on a low income, and yes we do claim working tax credits, now we find out that we have to fill in twice as many forms to claim more money to live.
It's a pity that you don't do something about getting people into work who are over the age of 40, like me, who have years of experience and knowledge but can't get a job for love nor money.
Your new ageism law does NOT work.
ashley, folkestone,
Just remember this budget when it's time for the next general election.... and vote accordingly! I just hope that everyone is as sick of "spin" as I am and that the firemen, sportsmen and women, farmers, hauliers, nurses, police, doctors, teachers, public sector workers, anyone undercut or forced out of business by the tide of less than minimum wage immigrants and everyone else who has become financially worse off or had their business, occupation or pastime messed about with by this interfering, condescending, know-it-all, nanny state government votes too!
Pete North, manchester,
gorden keeps saying that pensioner couples will not pay any tax until their incomes rise above their personal allowances. This is a deliberate misleading half truth.
He often quotes a high joint income to illustrate the point
Since he will not now allow pensioner couples to combine their incomes and personal allowances, if one of the partners has only a small income ( in most cases the wife) a large part of one of the personal allowances cannot be used. The logic behind this is strange because for any claim for benefits joint incomes are used
c beardmore, stone, staffordshire
Thank you very much Mr Brown, as the owner of a small business employing 3 people I am delighted that corporation tax has gone up to 22%.
Charley Farley, kettering, england
Typically Gordon Brown. Give a little, take a lot. As a pensioner who has seen his tax liability increased he will never get my support.
Brian Chatfield, Brighton, England
Thank you very much Mr Brown, as one of those already living a frugal existence on a very small pension I am delighted find that my tax has now been doubled.
Graham, Eastbourne,