Clegg Claims Labour 'Pulling The Wool' Over Tax Reforms

Labour Are 'Pulling The Wool' Over Tax Changes

Deputy prime minister Nick Clegg has attacked Labour for trying to "pull the wool over people's eyes" about sweeping tax changes that came into effect on Saturday.

As the new financial year kicked in Labour made its campaign highlighting the impact of reforms, which includes a cut in the top rate of income tax, personal launching a poster with the tagline "Who Wants to Bung a Millionaire? Dave Does".

The Opposition said that "millions are paying more while millionaires pay less" and claimed a one earner family with children will be £4,000 worse off on average in the next 12 months as a result of changes introduced since the coalition took power.

Reducing the 50p top rate of tax to 45p will save 13,000 people with an income of more than £1 million an average of £100,000, it added.

But Clegg insisted ministers had fixed a "gross unfairness" in the system left by the previous government that allowed the rich to pay less tax than the poor.

In a "letter from the leader" he told Lib Dem supporters: "Of course, the new 45p upper tax rate - down from 50p - is also coming into effect. But don't let Labour pull the wool over people's eyes. They may complain now, but of the 13 years they were in power, the 50p rate was in place for just 36 days.

"In fact, for most of the time their top tax rate was 40p. Not 50p. Not 45p. But 40p - 5p less than now. And under Labour a cleaner would pay a higher rate of tax on their wages than a hedge fund manager selling their shares - a gross unfairness we have fixed."

Among a raft of changes that came in today is the largest rise in the personal allowance, which means that no one pays any tax until they earn more than £9,440.

Prime minister David Cameron took to Twitter to highlight change. He wrote: "From today 24 million people will be paying £600 less income tax than in 2010."

But shadow chancellor Ed Balls said the personal allowance increase was effectively swept away by the coalition's other benefit and tax reforms.

"Families with children are being hit hardest of all," he said. "For example, a one earner family with children will be a staggering £4,000 worse off on average this year because of tax and benefit changes since 2010. And this is on top of the income squeeze we have seen over the last three years as a flatlining economy has seen prices rise faster than wages.

"These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit.

"People in work, people looking for work, stay at home mums and pensioners hit by the granny tax are all being squeezed like never before. Millions are paying more while millionaires pay less."

Unite union general secretary Len McCluskey said: "Millionaires will be raising a glass of champagne to George Osborne this weekend as he slashes the incomes of people struggling to get by to give handouts to the rich.

"But ordinary people - taxpayers - will be furious that George Osborne has chosen to give away £1 billion to the super-rich while their fuel and food costs rise and wages are falling."

TUC general secretary Frances O'Grady said: "Cutting taxes for the richest in our society is a huge slap in the face for the millions of hard-working families struggling to make ends meet.

"This move, which will lead to the loss of vital revenues, comes at a time when low-income households are seeing a huge range of vital benefits and tax credits mercilessly cut back.

"It says a lot about this government's priorities that it is forever coming up with new ways to take money away from those at the bottom, whilst handing out tax breaks to those at the top."

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