18/04/2012 10:33 BST

45p Tax: Labour Accuse Cameron Of Misleading The Public

Labour today accused David Cameron of "knowingly misleading the public" after the Prime Minister went on the attack in the House of Commons over its opposition to the Budget cut in income tax on the super-rich from 50p to 45p .

Cameron told MPs that the effect of a Labour amendment opposing the 45p rate, to be voted on in the Commons later today, would be to leave those earning over £150,000 paying the even lower 40p rate.

But aides of Labour leader Ed Miliband said this was untrue, telling reporters: "He knows you can't use budget votes to bring in a new tax rate. It's completely out of order."

The row blew up following fiery exchanges at Prime Minister's Questions in the Commons, during which Miliband branded the Budget an "omnishambles" which had conned pensioners and made charities, churches and pasty-eaters worse off.

But the Prime Minister defended Chancellor George Osborne's package, telling Miliband: "This Budget cut taxes for 24 million people, this Budget cut corporation tax, this Budget made Britain competitive."

And Cameron called on the Labour leader to withdraw his income tax amendment, warning: "If he is successful, he will give us a 40p tax rate."

Miliband said Cameron was "talking rubbish as usual", and aides later said that Cameron must be aware that the Labour amendment would not restore the 40p rate, but leave the top rate "undecided", forcing Osborne to come back with fresh proposals.

"We are angry at Cameron's claim that we could have used a budget vote to bring back the 50p rate," said a senior Labour source. "The clear advice from Commons clerks is that it has always been out of order to use budget votes to bring back a rate of tax."

But a source close to Cameron responded: "Labour have bungled their amendment, as clear as day, and they should just accept that and rephrase it or pull it."

While many Conservative backbenchers are known to be keen to see a return to the 40p rate for top taxpayers, the source said there would be a three-line whip on them to oppose the Labour amendment this evening.

MPs will vote later today not only on the 50p rate, but also on a bid by rebel Tory and Liberal Democrat MPs to derail the introduction of 20% VAT on hot food like Cornish pasties.

The votes come on the day an influential Commons committee released a critical report on the Budget.

The Treasury Select Committee said the figures used by Osborne to justify axing the 50p rate were "highly uncertain" and suggested that ministers had failed to make the case for capping tax relief on charitable donations.

The committee also called for action to protect pensioners, who have seen the value of their savings hit by the Bank of England's decision to print money through quantitative easing.

After weeks of criticisms directed at different aspects of Osborne's package, Miliband said it was clear that the Budget had "comprehensively failed the test of fairness and spectacularly failed the test of competence".

Branding Osborne a "part-time Chancellor", the Labour leader said that the Budget would deprive charities of £500 million in contributions and hand over at least £40,000 a year to millionaires.

He said that Cameron was "a desperate Prime Minister who can't even justify his own Budget".

Appearing before MPs for the first time since the March 21 Budget, Cameron accepted he had had "a tough month".

But he insisted: "What this Budget is about is actually cutting taxes for 24 million working people, taking two million people out of tax, freezing the council tax, cutting corporation tax so we are competitive with the rest of the world.

"And for pensioners, we've increased the basic state pension this month by £5.30 a week. Far more than Labour ever would have done so."

He called on the Labour leader to condemn the "disgraceful" tax arrangements of his party's candidate for London mayor, which he said would see Ken Livingstone pay less tax than cleaners at City Hall.

He mocked Miliband over Labour's loss of the Bradford West by-election to Respect's George Galloway - who used his first PMQs since returning to Parliament to demand the withdrawal of UK troops from Afghanistan.