Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22
What it's like at a Stocks Bear Market Bottom - 29th July 22
How to lock in a Guaranteed 9.6% return from Uncle Sam With I Bonds - 29th July 22
All You Need to Know About the Increase in Building Insurance Premiums for Flats - 29th July 22
The Challenges on the Horizon for UK Landlords - 29th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gordon Browns Abolition of the 10% Tax Band- Leadership Challenge?

Politics / UK Politics Apr 19, 2008 - 03:04 PM GMT

By: Nadeem_Walayat

Politics Whilst Gordon Brown is busy generating embarrassing moments in the US trying to follow Tony Blair onto the global stage, at home Labour MP's incensed at the abolishment of the 10% Tax band and the impact it is having on die hard low paid Labour voters are now in open revolt.


Since New Labour were elected in 1997 one of their primary goals has been towards the redistribution of wealth towards the low paid, those unable to work and pensioners. They have by and large achieved this goal through implementation of multiple policies such as the Tax Credits system, boosting of state pensions and expansion of the range and number of benefits available. These actions more than any other have gone towards ensuring two successive labour victories following the first landslide win in 1997.

The smoke and mirrors publicity stunt of a cut in the basic rate from 22% to 20% has started to go horribly wrong as the government attempted to keep silent on the abolishment of the 10% tax rate so as to attempt to grab the headlines of tax cuts ahead of an general election which is now not expected to happen until 2010.

Gordon Brown has shown himself to be an excellent number 2 to Tony Blair's numero uno, but he is clearly unable to shift from thinking like a Finance Minister to thinking like a Prime Minister. The abolishment of the 10% rate band is a huge own goal and likely to hit New Labour hard in the May local elections as Labour voters protest at the apparent change in direction of New Labour in favour of the more well off.

The abolishment of the 10% tax band hits all those on low earnings without children which number in the several millions. Even the Treasury estimates that the tax change leaves 1 in 5 households worse off, hitting households on earnings of less that £18,500. In addition, most people paying into their pension pots lose 2% state contribution, therefore on face value this would make people less likely to save into stakeholder pension schemes.

What Gordon Brown should have done was to abolish the 10% tax rate by raising the threshold at which people pay taxes to £7,500. However that would have cost at least £6 billion so would have required a tax rise elsewhere.

At the same time the deepening credit crisis and prospects for a UK recession during 2009 is shattering Gordon Browns image of economic competence and opens the door for the opposition to build a case for the electorate to take over at the next election.

Unless Gordon Browns gets a grip on the Labour party and its policies then this may be seen as his "Poll Tax" moment, within a year he may be facing a leadership challenge as the party takes defensive action to avoid an election defeat in 2010. Therefore the logical thing to do would be a U-turn by reinstating the 10% Tax Band and putting the basic rate back up to 22%, this would be politically damaging but not as damaging as leaving the impact of abolishing the 10% tax band to fester. MP Angela Smith who threatened to resign from the Government has issued statements that alludes to a possible U-turn after changing her mind on Friday.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Attention Editors and Publishers! - You have permission to republish THIS article if published in its entirety, including attribution to the author and links back to the http://www.marketoracle.co.uk . Please send an email to republish@marketoracle.co.uk, to include a link to the published article.
Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in