10p U-Turn STILL taxes the poorest

Reuben and I couldn’t sleep, so we decided to go for a drive, pick up a Daily Mail and McD’s breakfast and see if that helped. On returning home, we read the frontpage of the Mail and decided to work out whether the Labour Party’s U-Turn really did help the poorest who were affected by the axing of the 10p band.

Proving that he has inherited his Papa’s hard sums genes, Reuben (with a teensy weensy bit of help) created the following spreadsheet to show the effect of Alistair Darling’s latest turnaround.

 

2007 2008 Old 2008 New Change on 2007 % Loss / Gain on 2007
5000 0 0 0 0  
6000 78 113 0 77.5 1.3%
7000 178 313 193 -15.5 -0.2%
8000 345 513 393 -47.9 -0.6%
9000 565 713 593 -27.9 -0.3%
10000 785 913 793 -7.9 -0.1%
11000 1005 1113 993 12.1 0.1%
12000 1225 1313 1193 32.1 0.3%
13000 1445 1513 1393 52.1 0.4%
14000 1665 1713 1593 72.1 0.5%
15000 1885 1913 1793 92.1 0.6%
16000 2105 2113 1993 112.1 0.7%
17000 2325 2313 2193 132.1 0.8%
18000 2545 2513 2393 152.1 0.8%
19000 2765 2713 2593 172.1 0.9%
20000 2985 2913 2793 192.1 1.0%
21000 3205 3113 2993 212.1 1.0%
22000 3425 3313 3193 232.1 1.1%
23000 3645 3513 3393 252.1 1.1%
24000 3865 3713 3593 272.1 1.1%
25000 4085 3913 3793 292.1 1.2%
26000 4305 4113 3993 312.1 1.2%
27000 4525 4313 4193 332.1 1.2%
28000 4745 4513 4393 352.1 1.3%
29000 4965 4713 4593 372.1 1.3%
30000 5185 4913 4793 392.1 1.3%

 

The table is very easy to read. On each income row you can see what tax was paid in the tax year 2007-2008, then what the abolition of the 10p rate changed that to. The third colum of figures shows the change from 2007 to the tax bands announced yesterday.

The obvious conclusion is that this doesn’t help the poorest at all. The ones who still lose out under the new tax bands are those who earn between £7000 and £10000. After that, the new £600 increase in the threshold means that income tax payers on an income above 10000 now are better off than in 2007.

So to summarise so far – Between £7000 and £10000 – worse off. More than £10000 – better off.

"But don’t stop there", said Reuben (or gurgles to that effect). The last column shows the percentage loss or gain in terms of the individual’s income. This column demonstrates that as a proportion of their income, the Chancellor is still taking away from those who earn £8000 as much as he is giving to those who earn £15000.

This from a party that claims to want to lift people out of poverty.

At this point Reuben had had enough, similar to most of those struggling hard to raise a family on £10000 or less, and burst into tears only to be consoled by his mother and what he could get out of her. "Drink up", said Papa. "Mr Darling has milked all the most vulnerable in this country already and given it to those who are better off. You get as much as you can right now before the Chancellor finds another source of income to fund his latest nightmare".

Labour’s 10p debacle – If even a four day old knows it’s a disaster, what hope have they got of convincing the electors of the UK, let alone Crewe and Nantwich, that they deserve to stay in power?

Update – Dizzy has the musical version of the analysis above.

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