The uproar over the abolition of the 10p starting tax rate continues to gather pace. Quite rightly Labour MPs are giving Brown & Darling a good kicking over this. The problem is that they just don't get it. They think it is OK to take with one hand because they will just give it back by sticking more people on benefits & tax credits.
If Brown has achieved anything since 1997 it is to ensure that lots of tax accountants are getting richer. The tax system is ten times more complicated now than it was in 1997 thanks to tinkering and tax credits.
But I worry that Cameron doesn't get it either. The Chancellor is not actually wrong to abolish the 10% rate. He is wrong not to do so as part of a wider tax cutting agenda aimed at low and middle earners.
Abolishing the 10% rate simplifies the system. If it was accompanied by a hike in personal allowances to £10k no-one would complain. The Labour government has increased tax by the back door. No need to put up headline rates, when you can just stop the higher rate band level rising in the face of wage inflation. So thousands more people are now paying 40% tax compared to 1997 just due to the top band not being raised at a fair rate.
Cameron should say clearly that getting rid of the 10% band is correct but that it must be accompanied by a wider re-think of the tax burden. Just hitting the hard-working families and individuals is wrong wrong wrong & has nothing to do with social justice.
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