MARTIN VOTES FOR LOW TAX FOR LOW PAID (AGAIN)

9.44.00am BST (GMT +0100) Wed 30th Apr 2008

CHELTENHAM Lib Dem MP Martin Horwood this week repeated his vote against the Government's doubling of the 10p tax rate for the lowest paid. Labour MPs (Monday 28 April) voted for provisions in the Finance Bill dealing with the doubling of the 10p tax rate, without guaranteeing there will be an adequate compensation package in place to help those on low incomes who are losing out.

The debate could have seen an embarrassing defeat for the Government. But Labour rebel Frank Field MP withdrew his amendment demanding compensation be put in place for low earners who lose out under the proposals. 45 Labour MPs had signed his amendment before it was withdrawn.

The Field amendment was withdrawn because Labour MPs accepted the Government's promise of a compensation package for those who lose out. In a letter sent on Wednesday 23 April, Chancellor Alistair Darling said he would use the minimum wage, tax credits and winter fuel payments to compensate the estimated 5.3 million families who will suffer financially from the abolition of the 10p rate. But the Lib Dems claim the Government's promises are full of holes and the MPs have been taken in.

Martin first voted and spoke against the change in the tax regime last year during last year's budget debate when Gordon Brown was still Chancellor. In the debate he said: "At the heart of the Budget is essentially a tax con. The Chancellor of the Exchequer gave away some £8 billion by cutting the basic rate of tax from 22 to 20 per cent., but largely offset that by doubling the starting rate of tax from 10 to 20 per cent....a budget that doubled the rate of income tax for those on the very lowest incomes".

Martin voted against the proposal again this week. "Labour MPs cheered the Budget last year. It seems to have taken them a whole year to work out what Gordon Brown was doing and even then their rebellion collapsed at the last minute leaving many questions unanswered" said Martin.

The unanswered questions and get-outs in the Government's promises include:

• What is going to be backdated in the compensation package? In Parliament the minister was specifically questioned on this and could not say.

• How do the Government expect people on below average incomes to pay today's bills with money they won't get for another six months?

• How long will the compensation package last for? Will it just last for one year, as some government measures do? The effect of the tax change, of course, will be permanent.