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PM admits mistakes over 10p tax rate

Prime Minister Gordon Brown has admitted making "mistakes" in abolishing the 10p rate of income tax.

The Prime Minister told the BBC that the government "didn't cover as well as we should have" losses to low earners without children and pensioners aged 60 to 64. But Mr Brown said he was "listening" and "learning" as prime minister.

Mr Brown announced the abolition of the 10p starting rate of income tax in his last Budget as Chancellor, in 2007. He recently told BBC Radio 4's Today programme this had helped the poorest in society most "because 85% of the benefits [of the old rate] went to the highest earners". However, he added: "We made two mistakes. We didn't cover as well as we should that group of low-paid workers who don't get the working tax credits and we weren't able to help the 60 to 64-year-olds who didn't get the pensioner's tax allowance."

Mr Brown also said: "The problem was quite specific... We had dealt with this very, very major tax reform. We hadn't done enough for these two smaller groups."

Ministers saw off a potential Labour backbench revolt by pledging concessions last week for those hit by the 10p tax rate abolition. These are to be outlined over the next few months.

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About The Author

Sarah Laing
Editor, TaxationWeb News

Sarah is a Chartered Tax Adviser. She has been writing professionally since joining CCH Editions in 1998 as a Senior Technical Editor, contributing to a range of highly regarded publications including the British Tax Reporter, Taxes - The Weekly Tax News, the Red & Green legislation volumes, Hardman's, International Tax Agreements and many others. She became Publishing Manager for the tax and accounting portfolio in 2001 and later went on to help run CCH Seminars (including ABG Courses and Conferences).

Sarah originally worked for the Inland Revenue in Newbury and Swindon Tax Offices, before moving out into practice in 1991. She has worked for both small and Big 5 firms. She now works as a freelance author providing technical writing services for the tax and accountancy profession.

Article Added Wednesday, 30 April 2008

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