Thursday, April 19, 2012

Labour bids to block 'granny tax'

Elderly woman holding moneyNearly four and a half million people will be affected by the so-called "granny tax"

Labour will attempt to scupper plans to freeze age-related tax allowances for pensioners in the Commons later.

Over 65s can currently earn more before paying tax than working-age people.

The government wants to end that, but says it is making older people better off overall by raising the basic state pension by more than 5%.

But shadow chancellor Ed Balls says the so-called "granny tax" could leave some pensioners on relatively modest incomes up to �323 a year worse off.

On Wednesday, Labour tried to block both the "pasty tax" - a plan to change VAT arrangements on hot takeaway food - and the cut in the 50p top rate of income tax.

It lost both votes, by 35 and 67 votes respectively.

In a third vote, over the imposition of VAT on static caravans, 17 Conservatives rebelled and the government's majority was cut by more than two-thirds to just 25.

'Botched'

At present, people of working age can earn �8,105 a year before paying income tax - a figure which is set to rise next year.

Income tax allowances

  • Working age people can currently earn �8,105 a year before tax
  • That figure will rise next year and the target is for it to reach �10,000 by 2015
  • Over 65s can currently earn �10,500 and over 75s, �10,660, before tax
  • Allowances will be frozen from April 2013 for existing pensioners and as a result of inflation, their value will gradually fall into line with the working age figure
  • Anyone turning 65 after April 2013 will not receive any extra allowance at all

Pensioners get a more generous tax-free allowance - �10,500 for 65-74 year olds and �10,660 for those aged 75 and over.

From next year, the government plans to freeze those allowances for anyone already aged 65, and scrap them altogether for anyone who turns 65 after 5 April, 2013.

Nearly four and a half million people will be affected, losing an average of �83 each, but the government says the move will save �1bn by 2015.

Mr Balls called on Conservatives and Lib Dems to join his party to defeat "one of the most unfair policies in this botched Budget".

"They should join Labour in standing up for pensioners in their constituencies who have worked hard all their lives by voting down the granny tax," he said.

"How can it be right that millions of pensioners are asked to pay more so that millionaires can pay less?"

'Tax on prudence'

Many pensioners groups have criticised the move.

Geraldine Bedell, editor of the website Gransnet, told the BBC: "What people are saying on our forums is that they feel that they're a soft target, that this is a tax on prudence.

"These are people who've saved all their lives and expected to have a certain income, a very modest income, and their expectations are being cut from underneath them."

But Mervyn Kohler, from Age UK, said that while some people would be affected, the change was "relatively small beer in the big picture of things".

"By definition, they are the people who will have got better incomes, because they have savings and investments and things like that that they can rely on."

Angus Hanton, from think tank the Intergenerational Foundation, said the government was not going far enough.

"We wonder why people over 65 don't have to pay National Insurance on earned income. That seems to us to give them an unfair advantage in the labour market," he said.

Source: http://www.bbc.co.uk/news/uk-politics-17767827#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

fbis world news connection from world newspapers fun world news for kids funny world news 2011 god\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\u0027s world news for kids

No comments:

Post a Comment