Labour to Re-Introduce the 10p Rate

Ed Miliband and the Labour Party have announced that if they win power in 2015 that they will re-introduce the 10p tax rate. The 10p rate was scraped in 2008 by Gordon Brown and caused much controversy as poorer working families were worst affected. Ed Miliband said that “it was a very bad mistake” and one that they wished to reverse. Miliband said that Labour would recover the loss in tax revenue by introducing a ‘mansion tax’ on properties worth £2 million or more. So what exactly does this all mean? Well before the original changes everyone paid zero taxes on their first £5,225, a 10p rate on the next £2,230 and a 22p rate above that until the 40p threshold. After the changes were implemented everyone paid a 20p rate above £5,225 until the 40p rate threshold. The policy change was a complete blunder and lost Labour a lot of support. Although Ed Balls (the Shadow Chancellor) and Ed Miliband have promised to re-introduce the 10p, they haven’t said how it will be done exactly. Since 2008 the point where income tax starts has risen to £8,105 and could rise even further before 2015. The move by Ed Miliband is quite surprising as previously he had refused to say specifically what the Labour Party would do after a 2015 victory as it was always “too early”. It is roughly two years until the next general election so it is quite possible that Labour is throwing out policy ideas to see what’s popular with the public. According to the monthly Ipsos Mori/Standard poll, Labour is maintaining its significant lead.

Conservative: 30%

Labour: 42%

Liberal Democrat: 7%

UKIP: 9%

According to Ipsos Mori this would result in a Labour majority of 112! Although a heck of a lot can change in politics in two years, it certainly gives Labour a large room to manoeuvre.