Labour Tax increase hits the low paid and pensioners

12.00.00am BST (GMT +0100) Mon 7th Apr 2008

Liberal Democrats in Edinburgh South have launched a stinging attack on the Labour Government for bringing in tax changes that have increased income tax bills for thousands of local people.

On 6th April, Labour doubled the starting rate of income tax from 10p to 20p in the pound. Previously, a 10p rate was paid on the first £2230 of taxable income. As a result, instead of taking £223 in income tax on this portion of people's wages, Gordon Brown's government is taking £446.

Though the standard rate of income tax has been cut from 22p to 20p in the pound, a single person with no children would have to be earning over £18,500 to be better off under the tax changes.

"Things have gone seriously wrong when Labour has pushed up taxes on people on low incomes to pay for tax cuts for the better off," said local Lib Dem Westminster Spokesperson Fred Mackintosh. "Thousands of residents with small pensions or low to average earnings are now receiving sharply increased tax demands at the same time that many are facing big increases in bills for gas, electricity and transport."

Those worst hit by the tax changes include:

· A single person with no children earning less than £18,500 will be a net loser, by up to £232 a year.

· People taking early retirement with a taxable income of less than £8,000 will lose, by up to £232 a year.

The Liberal Democrat plan to cut the tax burden for those on low income include scrapping council tax and replacing it with a local tax based on ability to pay, and cutting the standard rate of national income tax by 4p in the pound, paid for by closing tax loopholes used by the wealthy and by increasing green taxes, such as the duties paid by the most polluting vehicles and those who travel in the most polluting