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Labour Plans Mansion Tax To Fund 10p Tax Rate
Ed Miliband has called for the 10p tax rate to be reintroduced, funded by a mansion tax on homes worth more than £2m.
In an audacious bid to outflank David Cameron, he claimed Labour would use next month's Budget to bring back the band controversially scrapped by Gordon Brown in 2007.
The measure would be funded by a mansion tax on homes worth £2m or more, Mr Miliband explained in a key speech on the economy in Bedford.
The announcement was a surprise inclusion in the address, which had been billed as having no significant new policy, and there were immediate questions about how the figures would add up.
But the Labour leader appeared, in one swoop, to have stolen the Tories' thunder and appealed to the Lib Dems who favour a mansion tax.
The move is a clear attempt to pile pressure on Chancellor George Osborne, who will deliver his Budget next month amid mounting concerns about the sluggish recovery.
The clear rejection of Mr Brown and Labour's past will also be seen as tactical move as Mr Miliband tries to restore the public's trust in his party on the economy.
He said: "A One Nation Labour Budget next month would lay the foundations for a recovery made by the many, not just a few at the top.
"Let me tell you about one crucial choice we would make, which is different from this Government. We would tax houses worth over £2m. And we would use the money to cut taxes for working people.
"We would put right a mistake made by Gordon Brown and the last Labour government. We would use the money raised by a mansion tax to reintroduce a lower 10p starting rate of tax, with the size of the band depending on the amount raised.
"This would benefit 25 million basic rate taxpayers - moving Labour on from the past and putting Labour where it should always have been - on the side of working people."
In addition to his flagship pledge, Mr Miliband renewed his call for the reduction in the top tax rate to be reversed and for a temporary VAT cut to kick-start the economy.
Speaking where Tory prime minister Harold Macmillan made his famous "You've never had it so good" speech in 1957, he said millions now fear they will "never have it so good again".
His intervention came 24 hours after a Bank of England warning that the pressure on living standards will continue for another three years, with inflation likely to be above 2% until early 2016.
Labour aides suggested the party envisaged a 10p tax rate on the first £1,000 of taxable income, paid for by raising £2bn with a mansion tax - a move that would save basic rate taxpayers £100-a-year.
Both Mr Miliband and shadow chancellor Ed Balls contrasted its proposal to the move to slash the top rate of tax to 45p in April as they sought to portray the Tories as the party of the rich.
Mr Balls wrote in the Evening Standard: "It would boost the economy and put money back into people's pockets, and it would make work pay by ensuring people keep more of their income if they increase their hours."
A blindsided Prime Minister, during a visit to Eastleigh, suggested the idea had been rushed out without considering how it would work.
"My prediction is that they won't have thought it through or costed it properly and we will discover over the course of the day all sorts of problems and issues with a policy that looks like it has been cobbled together overnight," he said.
Labour's move came after Tory MP Robert Halfon started a push for the return of the 10p rate and the Prime Minister appeared to signal he was open to the idea at PMQs on Wednesday.
Downing Street insisted low earners who lost out the most when the 10p rate was axed by Mr Brown now paid no income tax at all because of the coalition's changes to the basic threshold.
It also warned that Labour's plan would mean "government snoopers" revaluing every home, which would push up council tax for millions.
And it pointed out that the Government had increased taxes for the rich in every Budget, through higher stamp duty and levies on large pension pots.
"Losers under Labour have become winners thanks to our tax changes," a spokesman said.
Lib Dem Business Secretary Vince Cable - who has long championed the idea of a mansion tax - welcomed "Labour's change of heart".
"It is good that they have seen sense," he said. "They were in power for 13 years, did absolutely nothing about it, inequalities of wealth grew, property values grew at the top, ordinary families couldn't afford to buy houses. They did nothing about it in government. We Liberal Democrats want to do something about it."