Labour leadership challenger pledges tax relief reform
Labour leadership challenger Owen Smith has pledged to reform pensions tax relief should he become prime minister.
In a speech made yesterday at the Open University in Milton Keynes, Smith said the changes would come as part of a package aimed at delivering "the biggest boost to the living standards of low-paid workers for a generation."
This aims to improve workers' pay, in-work support and pensions to counter the "perfect Tory storm" of falling wages social security cuts and diminishing rights at work.
Smith said: "I'll reform pension tax relief so that the richest pay more and low-paid workers see the benefit through higher pensions, a real living wage and reversing the Tories cuts to universal credit."
Tax relief costs the government approximately £35bn a year. However, while more than half of all pension contributions are made by basic rate taxpayers, they only receive a third of tax relief.
Smith would task the Office for Budget Responsibility with setting the highest possible rate of pension tax relief (between 25% and 30%) that raises sufficient revenues to cover the costs of fully reversing cuts to Universal Credit and for a real living wage.
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