Tax Shake-up to "hit low earners hardest"

Low-income earners will be the first to feel the crunch of changes to income tax and national insurance. These measures, implemented by Gordon Brown, Prime Minister of the UK, were announced in the March Budget report and are scheduled for April 2009.

The new system, slammed as a “con-trick” by the Conservative Party, was initially presented as a tax cut for everyone. The basic rate of income tax will be reduced by 2 pence and the 10 pence band will be scrapped. This causes concern that lower income earners will be hard hit; the 10 pence band was beneficial to this income group. This measure will cancel out any benefits to other taxpayers.

The effects are far-reaching: parents and people earning more than £20,000 per annum will benefit; singles under the age of 25 who earn less than £20,000 per annum may lose out by up to £200 a year.

Those who are under 25 and earning less than £10,000 per annum stand to lose £197 a year. Should you earn £15,000, you will lose £97 a year, irrespective of your age. A single person earning £35,000 a year, however, stand to gain £303.
Vince Cable, who is the acting leader of the Liberal Democrat Party, said: "This confirms what we have always said; the Government’s tax policies have hit the poorest hardest... The public will be shocked that the lowest paid workers are the biggest losers from a policy that was supposed to help them. Taken together with the unfair council tax, we have a Government that talks of fairness and social justice but actually promotes policies which are regressive and favour the rich."
A Treasury representative promises reforms to the Budget, which will leave poor households better off. The average saving per household should be in the region of £1,050 per year and those families with children may reap a saving of £1,800.

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