Govt raises minimum wage but will double income tax of low paid

[Monday]

Yes, first the good news:

More than a million low-paid workers — two-thirds of them women — will receive a boost to their pay packets from today. And millions more will be entitled to more paid time off.

The increases to the national minimum wage and annual leave entitlement are a significant part of the Warwick Agreement between trade unions and the Labour party.

The adult minimum wage goes up from £5.35 to £5.52 an hour, while the hourly rates for 18-21 year olds and 16-17 year olds increase to £4.60 and £3.40.

All workers will now be entitled to 24 days annual leave — four extra days’ holiday a year. And there’s more to look forward to in future, with the statutory minimum set to increase to 28 days from 1 April 2009.

Ah, yes. But in his last budget Brown announced that the 10% rate of tax paid by the lowest earners will be doubled…

Shadow Chancellor George Osborne said later that the 2% cut in income tax would be cancelled out by the abolition of the 10p rate. […]

“And all that money he’s giving to people in that apparent income tax cut, he is actually taking back off them with income tax increases.”

He said someone with a salary of between £14,000 and £16,000 a year would probably see their income tax bill go up.

Liberal Democrat leader Sir Menzies Campbell said it was “a Budget of missed opportunities” and abolishing the 10p starting tax rate meant income tax would be increased for many people.

“We are asking the poor to subsidise the rich,” Sir Menzies told MPs.

The Gord giveth and the Gord taketh away…

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