Darling Announces Major Turnaround In 10p Tax Rate Row

by Amanda Banks, Tax-News.com, London

15 May 2008

UK Chancellor Alistair Darling this week announced a major move which, it was hoped, would end the row over the abolition of the 10p tax rate.

After weeks of intense debate, Mr Darling delivered what amounted to a mini-budget, in which he announced that he will raise the personal tax allowance by GBP600 to GBP6,035, backdated to 6th April of this year.

This u-turn has been welcomed by low-income earners, who are likely to be better off to the tune of GBP120 by the end of the year as a result of the announcement, in an effort to compensate for any loss caused to them by the abolition of the tax.

However, Mr Darling's announcement has been met with some inevitable criticism by opposition parties, with the move being branded as "the biggest by-election bribe since Harold Wilson announced the building of the Humber Bridge in 1966," by Tories, according to an Independent report.

Shadow Chancellor George Osborne reportedly condemned the move in no uncertain terms, arguing that:

“This sounded less like a considered statement from a Chancellor and more like a cynical press release in a by-election campaign."

Darling, meanwhile, has been quoted as stating that:

“This family tax cut provides support this year for those on middle incomes at a time where they face increased bills, so supporting the economy.”

Despite this move by the Chancellor, there is still concern that the initial tax miscalculation may have caused lasting damage to Prime Minister Gordon Brown's reputation.

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