Middlesbrough South and East Cleveland Labour MP, Tom Blenkinsop, today (April 10th 2012) said that Prime Minister David Cameron ‘must bring his chancellor, George Osborne, to heel’ after a national newspaper revealed that the Chancellor may be using advice from the Office of Tax Simplification (OTS) to increase the level of direct taxation on state pensions yet again.
Tom said: “The state pension, which rises from £102.15 to £107.45 a week today, is currently paid before tax is deducted. Now it has been revealed by the Independent newspaper that the Chancellor is considering slapping a 20 per cent basic tax rate on the sum at source, reducing it to £85.96 a week for millions.”
“They say that the Treasury’s tax advisers are looking into the idea and will report to George Osborne later this year in time for the next Budget. They are using the work of the Office of Tax Simplification in exactly the same way this was used as an excuse for bringing in the ‘granny tax’ at the recent budget.”
“The Independent has a quote from John Whiting, the tax director of the Office of Tax Simplification (OTS), admitting that the idea has been aired and that the idea of bringing the state pension into the pay-as-you-earn system was ‘the front-runner’ in their inquiry work, although he admitted that this would cause ‘cash-flow issues’ for some pensioners.”
“The stark reality is that the two parties that make up the Coalition never had tax increases for pensioners in their manifestoes and it was not in even the small print of the Coalition agreement. It is wrong also for them to use work done by a civil service committee as a cloak for more financial attacks on hard done by pensioners. If the Chancellor is looking for ‘simplification’ then I would suggest he simplifies and tightens up on the tax loopholes which – it has also been admitted today – are leaving millionaires free to use elaborate tax avoidance measures to evade any payment back to the country in which they made their money. If he won’t do this, then I would call on the Prime Minister to intervene to make sure this happens instead.”