Miliband to reinstate tax band 'mistakenly' scrapped by Gordon Brown in 2007
The battle lines on taxation for the 2015 general election were drawn yesterday when Labour made a surprise promise to bring back a 10p starting rate of income tax.
Ed Miliband announced that the move would be funded by introducing a mansion tax on homes worth more than 2m, which would raise 2bn.
Labour's proposed 10p band would apply to the first 1,000 of taxable income and would be worth 100 a year to the 25 million basic- rate taxpayers, who currently pay 20p in the pound.
But people paying the 40p higher rate would not benefit.
The Labour leader admitted that Gordon Brown's decision to abolish the 10p rate in 2007 was a mistake. Although he and his shadow Chancellor, Ed Balls, both close Brown allies, defended the move publicly, Mr Balls said yesterday: "Both Ed Miliband and I said to Gordon Brown at the time that it was the wrong thing to do; it was a mistake. He was Chancellor and he made that decision."
Mr Miliband answered growing criticism that Labour lacks policies by trying to outflank the Conservatives on tax cuts and committing his party to a mansion tax. Some 70,000 properties would be affected, with Labour saying that more than half are second homes.
The high-value property tax has long been favoured by the Liberal Democrats, who want a 1 per cent annual levy on the value of a home above 2m. So a 3m property would attract a 10,000-a-year charge. The Tories, who have blocked the idea inside the Coalition, warned that the tax would mean "government snoopers" assessing the value of all homes.
The Liberal Democrats welcomed Labour's conversion to a mansion tax but insisted the best way to help people on low incomes is to raise the threshold at which people start to pay tax, which the Coalition will increase to 10,000 a year by 2015. Labour argued that a 10p rate would be more progressive and do more to boost work incentives.
Although Mr Miliband stopped short of saying his tax plan will definitely be in Labour's 2015 election manifesto, it looks certain to be a key commitment. Labour may also pledge to bring back the 50p top rate of tax on incomes above 150,000, which will be cut to 45p in April.
Speaking in Bedford, where in 1957 the Tory Prime Minister Harold Macmillan said Britons had "never had it so good", Mr Miliband said that falling wages and rising prices meant many now felt "they will never have it so good again". …