Tax: The 10p Con-Trick, Fuel Duty and Oil Prices

Over a year ago, in the budget on 21st March 2007, Gordon Brown, as chancellor, proudly announced that he was cutting 2p of the basic rate of income tax, while doubling the 10p starting tax rate. Labour MPs cheered, and the Liberal Democrats argued it was "asking the poor to subsidise the rich".

It was clear then that it would benefit people on higher incomes, while those on less than about £17,000 would lose out, only some of whom could then scrounge for compensation via the red-tape and frustration of tax credits.

This April, the changes hit home with many low paid people paying more at the worst possible time. Since the outrage and backlash, the government have backed down, now borrowing £2.7bn to try to fix the mess. Yes. The government are borrowing more money to cut taxes for the better off, while leaving those on lower incomes no better off.

At the same time, oil prices hit new record highs on a weekly basis. The effect for the government is that they are now getting £13m per day, over £4bn a year, in extra VAT on fuel that they didn't budget for.

I doubt that many of us need to reach for a calculator to know that something doesn't add up.

The Liberal Democrats are continuing to push the government for tax sense, not tax chaos.

We have costed plans:
- to cut income tax by 4p
- replace council tax with a local income tax based on the ability to pay
- to pay for this using revenues from green taxes, and by closing tax loopholes exploited by the super-rich.

Full policy details can be found at: http://tinyurl.com/2ll7hq