James Lowman, head of the Association of Convenience Stores (ACS) worries that low paid workers in retail will may claw back their losses if the government chooses to reform the minimum wage as a way of making up for the abolition of the 10p tax rate.
There are already plenty of part time and full time workers who need to rely on additional state benefits in order to top up their low wage packets and the rates are already due to increase in October. The hourly rate for 18 to 21-year-olds will increase from £4.60 to £4.77, while the statutory wage for 16 and 17-year-olds will go up from £3.40 to £3.53. The rate for those ages 22 and over will increase by 21p to £5.73 per hour.
I found it interesting that the UK’s minimum wage varies with the age of the wage-earner; we used to have a so-called “training wage” in the States, but the primary criterion was lack of experience, not age, and anyway it was allowed to die in 1993.
But what was fascinating about this was the backstory on the “abolition of the 10p tax rate.” The Guardian (yes, yes, I know, I know) put out a Q&A page on the matter, and get a load of this:
The 22% tax rate is coming down to 20%, and the 10% tax rate for lower earners is being abolished altogether forcing more than five million workers up into the 20% tax bracket.
There’s only one other bracket: forty percent, which kicks in at £36,000.