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Darling reveals income tax plans

13/05/2008

Alistair Darling has announced the government's plans on income tax compensation to the Commons.

Eighty per cent of those losing out as a result of the abolition of the 10p income tax rate will be fully compensated, with the remainder receiving 50 per cent compensation.

Those aged between 60 and 64 will get the advantage of an increased personal allowance and a winter fuel allowance increase, to be backdated to April 6th.

Mr Darling said his measures were the "fairest and most effective way" of dealing with the problem.

Shadow chancellor George Osborne responded by saying the move was motivated by the Crewe by-election, saying the "compensation con" followed the 2007 "tax con Budget".

The chancellor was forced into a U-turn on the issue last month when Labour rebel Frank Field mustered enough backbench support to threaten a government defeat on the issue.

Backing down over the abolition of the 10p starting rate of income tax, Mr Darling had agreed to consider ways in which those losing out as a result of the change could be compensated in a letter to Treasury committee chairman John McFall on April 23rd.