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Ministers face new 10p tax fight Ministers face new 10p tax fight
(about 3 hours later)
The government is facing a fresh challenge from Labour MPs over its abolition of the 10p income tax band.The government is facing a fresh challenge from Labour MPs over its abolition of the 10p income tax band.
In May, Chancellor Alistair Darling quelled a possible backbench rebellion when he announced a £2.7bn compensation package for those who lost out.In May, Chancellor Alistair Darling quelled a possible backbench rebellion when he announced a £2.7bn compensation package for those who lost out.
But several MPs are thought to support amendments to the Finance Bill to help 1.1 million people not covered by that. But 21 MPs have signed amendments to the Finance Bill by two Labour MPs to help 1.1 million people not covered.
The Tories are calling for ministers bring forward their proposals to help the 1.1m, to be voted on by Parliament.
The amendments, by two Labour MPs, are not likely to pass but could get enough support to embarrass the government.The amendments, by two Labour MPs, are not likely to pass but could get enough support to embarrass the government.
On Saturday, the Commons Treasury select committee criticised the chancellor's compensation package. 'Blunderbuss' approach
Debate
It said it would make up the losses of most of the 5.3 million affected by the 10p decision, but leave 1.1 million of the poorest workers out of pocket by up to £120 a year.
It is unclear whether Speaker Michael Martin will call the amendments, tabled by North-West Leicestershire MP David Taylor and Birmingham Selly Oak MP Lynne Jones, for debate on Tuesday.It is unclear whether Speaker Michael Martin will call the amendments, tabled by North-West Leicestershire MP David Taylor and Birmingham Selly Oak MP Lynne Jones, for debate on Tuesday.
FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme Mr Taylor's amendment - signed by 21 MPs, 19 of them Labour - would introduce a taper mechanism into the £600 increase in personal allowances for income tax offered by the chancellor.
Mr Taylor's amendment - which his office said was signed by 15 other Labour MPs - would introduce a taper mechanism into the £600 increase in personal allowances for income tax offered by the chancellor.
This would ensure that all of those who lost out from the 10p change were compensated, it was added.This would ensure that all of those who lost out from the 10p change were compensated, it was added.
Dr Jones's plan would give individuals a choice on whether to opt in or out of the 10p rate, allowing anyone put at a disadvantage by the change to stick with the old rates. FROM THE TODAY PROGRAMME class="" href="http://news.bbc.co.uk/today/hi/default.stm">More from Today programme
Earlier threat Dr Jones's plan would let people choose whether to opt in or out of the 10p rate.
Mr Taylor told BBC Radio 4's Today programme that the compensation package announced by Mr Darling on 13 May had been a "blunderbuss" approach, £2bn of which had gone to people who had not lost out in the first place.Mr Taylor told BBC Radio 4's Today programme that the compensation package announced by Mr Darling on 13 May had been a "blunderbuss" approach, £2bn of which had gone to people who had not lost out in the first place.
He said his amendment was "concise and it is precise".
Asked how much his measures would cost, he said: "It's about £66m, this is the stuff that is down the back of the chancellor's settee at budget time. It's 100th of 1% of his tax take, so the amount is minor but the principle is important."
'Proper settlement'
He said he hoped to get a commitment from the Treasury that all of those who lost out would be compensated within this financial year.He said he hoped to get a commitment from the Treasury that all of those who lost out would be compensated within this financial year.
Downing Street indicated that no further changes were planned to income tax arrangements for this financial year. No changes
Mr Darling will announce his plans for future years in the pre-Budget Report this autumn. And he told the BBC later that more than 20 MPs had signed his amendment adding: "There is a similar number that have indicated they will back me in the lobbies if it comes to a division but I am hoping that the minister who responds will give reassurances that there will be full in-year compensation to the remaining 1.1m people."
His compensation package was produced after Labour backbenchers had threatened to block the Budget by preventing the Finance Bill passing through Parliament. On Saturday, the Commons Treasury select committee criticised the chancellor's compensation package.
On Saturday, Frank Field, the Labour backbencher who led the rebellion, said: "We will be looking, when we debate this in the Commons, and when the government promises it will come back in November, for a proper settlement for everyone who lost out on 10p." It said it would make up the losses of most of the 5.3 million affected by the 10p decision, but leave 1.1 million of the poorest workers out of pocket by up to £120 a year.
Downing Street has indicated that no further changes were planned to income tax arrangements for this financial year.
Shadow chief secretary to the Treasury Philip Hammond said the Conservatives would put forward their own amendment to "force the government to come back to Parliament with a full report on proposals" to help the 1.1m.
He said their proposal would mean Parliament would vote on that package of measures at the time of the pre-Budget Report in the autumn, when Mr Darling will announce plans for future years.
The chancellor's compensation package was produced after Labour backbenchers had threatened to block the Budget by preventing the Finance Bill passing through Parliament.
The decision to scrap the lowest 10p tax rate, made by Gordon Brown in his last Budget as chancellor in 2007, came into force in April this year - alongside a reduction in the basic rate of tax from 22% to 20%.The decision to scrap the lowest 10p tax rate, made by Gordon Brown in his last Budget as chancellor in 2007, came into force in April this year - alongside a reduction in the basic rate of tax from 22% to 20%.
The Finance Bill returns to the Commons on Tuesday and Wednesday. The Finance Bill, which enacts the Budget, returns to the Commons on Tuesday and Wednesday.
In addition to the row over the 10p tax rate, changes to vehicle excise duty on the most polluting cars are also likely to be scrutinised.In addition to the row over the 10p tax rate, changes to vehicle excise duty on the most polluting cars are also likely to be scrutinised.
The Conservatives have tabled an amendment to prevent the new rates applying retrospectively.The Conservatives have tabled an amendment to prevent the new rates applying retrospectively.