Making tax fairer

We are changing the tax system to make it fairer by lifting the poorest workers out of Income Tax altogether and cutting taxes for most people. This April 880,000 workers will stop paying Income Tax when the lower threshold is raised from £6,475 to 7,475.

The Institute for Fiscal Studies says the tax changes will mean the richest tenth will lose around 3% more of their income and that the main winners from the 2011 tax changes will be lone parents who are not working, and low-to-middle income households.

The IFS report concluded that:
· The main winners from the 2011 tax changes will be lone parents who are not working, and low-to-middle income households
· For example a family with two children and one person earning £20k will be £530 better off
· Those earning up to about £42.5k a year (including tax credit) will also be better off owing to the changes being introduced in April
· The biggest losers are the very richest households owing to restrictions on the amount that can be contributed to a private pension. They have also been affected by the 50% income tax rate on earnings above £150,000 and withdrawal of the income tax personal allowance above £100,000.

0 thoughts on “Making tax fairer

  1. Helen – who wants to see anyone struggle? But surely this is a step in the right direction in making the tax system better reflect ability to pay?

  2. Marriage/Civil Partnerships Equality

    Fairness isn’t just about tax. Lynne, does the UK Government intend to settle the same-sex marriage/civil partnerships “Equal Love” legal case, and voluntarily introduce a bill in the UK parliament, so that the European Court of Human Rights does not have to issue a judgment?

  3. Thanks for taking about fair tax, it’s (rightly) an important subject in this time of austerity.

    Thanks also for effectively voting to sell off our national forests in the commons yesterday.

    Why is this related to fair tax? In case voters don’t know the story, we own large forests around England that are managed by the forestry commission. Tax? Well, Lynne & her government are going to sell them off, actually lease them for 160 years, all because of the deficit of course. What many voters probably don’t know is that income from exploiting woodlands is both income and capital gains tax free, that’s it, no tax. Once the wood has been harvested, sold (tax free), the new owners replant and claim a large replanting subsidy from the government (us again). Not enough public cash going into their pockets? Wait, there’s more! The growing & very lucrative carbon trading market for yet more tax fee cash.

    Not sure, but this sounds suspiciously like giving our forests away for free. Won’t take the new landowners too long to claw back the cash they pay for the leases and then they’re home and dry. Fair tax for them maybe, not quite so fair for the taxpayer who will then front up the tax breaks etc for 160 years. Nature reserves are likely to be going the same way too.

    Apologies for the rant, but it is so wrong as a policy….and it is opposed by 84% of the population, cross party. Is this really, honestly how democracy works? I don’t think so and the government should be ashamed of itself.

  4. Apologies for my fuzzy brain, I meant corporation tax and not capital gains tax! I should never post when grouchy…..

  5. @David

    Yes, I’m as disgusted as you are – I really can’t believe this robbery has been voted through by Tory-led MPs including Lynne. Clegg talks about not leaving our future generations indebted yet steals the floors from beneath them (and us of course).

    Going back to ‘making tax fairer’, wouldn’t it be fairer if the government spent more on retrieving the c£80bn in avoided and evaded taxes every year?

    Alas no, the fervently freemarket Neo-Liberal party sells our forests at a loss to corporations as a tax dodge – dispicable.

  6. First: Fair tax.

    Lynne,

    Your income tax changes cannot be considered in isolation. You have just raised VAT permanently to 20%, so there is no way in the world you can say that you have rebalanced that tax burden away from the poor. You are speaking with a forked tongue.

    Secondly, Forests.

    There is such a long tradition of public use of forests in this country. The Law of the Forest (which I think was finally removed in the 70s) was considered older and more important than Magna Carta in terms of the protection of the freedoms of the individual. This is a very deep-seated psychological thing for our nation and whatever the economic argument, would create a level of distrust in the government that their bean-counters have vastly underestimated. I think it is very unlikely to go ahead. Cameron may be many things, but he is not stupid.

  7. From a sidebar on the blog

    >What they say about me…
    >She’s more interested in telling what she sees as the truth than in toeing the >party line.
    >James Kirkup, Telegraph political correspondent, May 2010

    This makes me a bit sad really. Lynne has been an interesting example of how independent-mindedness is controlled. When someone gets a minor government post, a stake in the big game, however trivial, they’re independence lessens without them even noticing. Maybe we are being unfair on Lynne. She is not being deliberately deceitful, just fulfilling the old prophecy about power corrupting, probably quite unconsciously. Actually, perhaps power doesn’t corrupt, maybe it just dulls.

    There seems to me to be less and less opportunity for freedom of thought in this country. We are all so in hoc to our bank managers, our bosses and a million minor regulations that even in our private lives we walk a smaller line of life than we once did. Everybody seems so interested in making sure that nobody gets more than them, that nobody oversteps the increasingly rigid line. I think this country needs to learn to love eccentrics, those who are passionate, those who are not so normal, those who explore, those who seek fun, those who rebel, those who put the humanity above the economic and the legally regulated in relations between people.

    We need to extend our freedoms outside the economic sphere as well as within it. I think in the English psyche, the forests are an enormous symbol of this. The ‘psychological’ forests are places we can congregate, play, relax, think, live as outlaws, build makeshift homes, make love all outside the regulations of the psychological city boundaries and away from CCTV. I think this is why there is such a strong gut reaction against the policy.

    Anyway, I’ll stop rambling…

    Michael

  8. sorry – “their” not “they’re” (among a number of horrible errors) – too free in my rambling, perhaps.

  9. One other thought. Cabinet collective responsibility as a way of silencing critics (indeed a whole party in this case) is much more about where you stand when the government is wrong rather than when it is right. Think about Short and Cook and the Iraq invasion.

  10. I see our dearly beloved MP has voted in favour of selling off the woodlands –
    still I guess any prospect of a principled stand on anything is a long distant memory –

    It’s a new political concept invented by the Lib Dems: unrepresentative democracy.

  11. Very disappointed about your vote in favour of the forest sell off, just typical of the Lib Dems. I’m counting down to the date I next get an opportunity to exercise my democratic rights…

  12. anyway, Lynne, what is your view on selling off the forests? I know you voted in favour of it, but is that what you really think?

    We have a right to know, by the way.

  13. Lynne, may I ask a simple Yes/No question with regard to the forest sell-off, and apologies that this is off the tax topic. Would you have voted for the measure if it had been proposed by the previous Labour administration when you were in opposition – assuming that the wording and policies were identical to those you voted Yes to this week? Yes or No?

    If the answer is No – then why did you vote in favour this time?
    If the answer is Yes – then excuse me whilst I pick myself up from the floor and apologise for completely misunderstanding previous LD policies.

  14. you know one good thing about all this lynne? is that we are realising that our politicians havent a f*cking clue how the average person lives…especially yourself who comes out with this rubbish….

  15. “and withdrawal of the income tax personal allowance above £100,000” – I just see this an an ideologue of the left in the Lib Dem party. If I understand this correctly, it means that somebody earning £100,000 goes home with less than somebody earning £99,500. Why would anybody ever again vote for a system which makes earning more less rewarding?

    Please correct me if I’m totally wrong, i.e. the allowance is removed gradually so as to remove this effect, but I can’t find anything saying this anywhere.

  16. Just going back to the forest sell off issue. Now that even David Cameron has admitted he does not think it was a good idea, and the policy has been shelved, do you still think that selling our national forests was as ‘hunky-dorey’ as your response on this issue and your yes vote would have suggested.