Local man hit by 10p tax rate bombshell

2.53.49am BST (GMT +0100) Thu 8th May 2008

Local pensioner, Brian Dancer, who lives in Hampden Park, was shocked to discover that when he got his pension pay slip last week the government?s recent abolition of the 10 pence tax rate had cost him £22.00 a month.

Mr Dancer said: ?I think it is an absolute disgrace. Gordon Brown has let pensioners like myself down. With the price of electricity and gas going up so sharply as well, this is a real blow for pensioners. I cannot believe a Labour Government could do this. There supposed to take care of people on low incomes but cutting £264 a year out of my pension is a funny way of showing it.?

Stephen Lloyd, Liberal Democrat parliamentary campaigner, who was contacted by Mr Dancer said: ?As a result of the Budget those unable to claim tax credits or Pension Credit and earning less than £18,500 a year are now seeing their income tax bill rise. Brian is just one example of the many people in Eastbourne and Willingdon who will suffer.?

?Under the Budget changes 5 million low earners will be hit. These include low paid couples or single people who do not have access to Child Tax Credit, and older women in the 60-65 age bracket whose pensions or salaries will be taxed at a higher rate. The Government claims that the losses for families will be offset by tax credits but these are complicated, means tested benefits which have sucked many into the bureaucratic nightmare of overpayments and underpayments.

?The Liberal Democrats questioned and opposed the tax changes when they were proposed a year ago. In 1999 when he introduced the 10p tax rate Gordon Brown, the then Chancellor lauded it as ?the lowest starting tax rate since 1962? and a tax cut which would ?help all lower and middle income families?. Now he is abolishing it.?

?Although the government has pledged to help low income families and pensioners hit by the abolition of the 10p rate, details will not be announced until the end of the year and it is not clear that the extra benefits will be backdated. During this time local residents such as Mr Dancer will continue to struggle to pay double their previous tax rate and it seems likely that any future changes will still fail to compensate those hit hardest.?

?Lib Dems do believe that standard rate Income Tax should also be cut, by 4p. But we would pay for this by increasing taxes on the wealthy rather than on the poorest in society. The unacceptable reality is that in Britain today the poorest pay a higher proportion of their income in tax than the very wealthy. Low and middle income earners in this country already shoulder too heavy a tax burden."