70 per cent of the cost of cutting the personal allowance goes to the richest half of society

Income tax is quite progressive; better to cut VAT or council tax.

Tomorrow is the beginning of the 2013/2014 tax year, and one of the changes that's going through is the latest rise in the Personal Allowance, which is increasing from £8,105 to £9,440. The Tories are making a big thing of it, launching this poster campaign:

That's going to sting for the Liberal Democrats, who are desperate to claim the increased personal allowance as their legacy from this government. But the phrasing is interesting, and worth examining.

For this poster, the Conservatives have dropped their favourite claim of "2.7 million taken out of tax altogether". That's good, because as the FT's Chris Cook explains, it's not exactly true:

The poorest families are paying a lot more in indirect tax (VAT, fuel duty, booze taxes) than in direct tax (income tax, NICs, council tax). In fact, direct taxes only overtake indirect taxes in size when you hit the fifth decile.

If you look at the second decile of households by income, just over 10 per cent of the taxes they pay are income tax. The other 90 per cent of their tax burden – still over £4,000 a year – comes from various other taxes, principally council tax and VAT. Between them, those two taxes account for almost half the tax burden on that decile.

But while it might not be the case that the tax cut takes workers "out of tax", it certainly is a tax cut for 24 million people. But rather than being a positive, this is actually the biggest flaw in the policy. This chart, prepared by the Resolution Foundation (pdf), shows the distribution of that tax cut amongst houses of different incomes:

As the chart clearly shows, the families with the biggest cash gain are the third richest tenth in the country, who get £210 each; and the families with the biggest proportional gain are the fifth richest tenth, gaining an extra 0.61 per cent of their income.

Meanwhile, the poorest families barely benefit from the rise at all. That's unsurprising; you need to be earning at least £8,105 a year for the rise to help you in any way, and at least £9,440 to gain the full benefit. And in a household, that needs to be true of both earners – otherwise half the allowance is wasted.

The chart also lets us get an idea of the distribution of the costs of the rise. Almost exactly 70 per cent of the revenue being forfeit for the increase in the allowance comes from the richest half of the nation. Less than 1 per cent of the money actually goest to the poorest ten per cent in the country.

The truth is that income tax in Britain is already one of the most progressive taxes we've got. The poorest in the nation pay little, while the richest pay most of their tax in income tax. As a result, if you want to cut taxes to help the poor, you would be better off returning VAT to its old rate of 17.5 per cent or increasing – rather than reducing – the number of people exempt from council tax. If you want to cut taxes to help the rich, going after income tax is the right way to do it.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How the row over Jackie Walker triggered a full-blown war in Momentum

Jon Lansman, the organisation's founder, is coming under attack. 

The battle for control within Momentum, which has been brewing for some time, has begun in earnest.

In a sign of the growing unrest within the organisation – established as the continuation of Jeremy Corbyn’s first successful leadership bid, and instrumental in delivering in his re-election -  a critical pamphlet by the Alliance for Workers’ Liberty (AWL), a Trotskyite grouping, has made its way into the pages of the Times, with the “unelected” chiefs of Momentum slated for turning the organisation into a “bland blur”.

The issue of contention: between those who see Momentum as an organisation to engage new members of the Labour party, who have been motivated by Jeremy Corbyn but are not yet Corbynites.

One trade unionist from that tendency described what they see the problem as like this: “you have people who have joined to vote for Jeremy, they’re going to meetings, but they’re voting for the Progress candidates in selections, they’re voting for Eddie Izzard [who stood as an independent but Corbynsceptic candidate] in the NEC”.  

On the other are those who see a fightback by Labour’s right and centre as inevitable, and who are trying to actively create a party within a party for what they see as an inevitable purge. One activist of that opinion wryly described Momentum as “Noah’s Ark”.

For both sides, Momentum, now financially stable thanks to its membership, which now stands at over 20,000, is a great prize. And in the firing line for those who want to turn Momentum into a parallel line is Jon Lansman, the organisation’s founder.

Lansman, who came into politics as an aide to Tony Benn, is a figure of suspicion on parts of the broad left due to his decades-long commitment to the Labour party. His major opposition within Momentum and on its ruling executive comes from the AWL.

The removal of Jackie Walker as a vice-chair of Momentum after she said that Holocaust Memorial Day belittled victims of other genocides has boosted the AWL, although the AWL's Jill Mountford, who sits on Momentum's ruling executive, voted to remove Walker as vice-chair. (Walker remains on the NEC, as she has been elected by members). But despite that, the AWL, who have been critical of the process whereby Walker lost her post, have felt the benefit across the country.

Why? Because that battle has triggered a series of serious splits, not only in Momentum’s executive but its grassroots. A raft of local groups have thrown out the local leadership, mostly veterans of Corbyn’s campaign for the leadership, for what the friend of one defeated representative described as “people who believe the Canary [a pro-Corbyn politics website that is regularly accused of indulging and promoting conspiracy theories]”.

In a further series of reverses for the Lansmanite caucus, the North West, a Momentum stronghold since the organisation was founded just under a year ago, is slipping away from old allies of Lansman and towards the “new” left. As one insider put it, the transition is from longstanding members towards people who had been kicked out in the late 1980s and early 1990s by Neil Kinnock. The constituency party of Wallasey in particular is giving senior figures in Momentum headaches just as it is their opponents on the right of the party, with one lamenting that they have “lost control” of the group.

It now means that planned changes to Momentum’s structure, which the leadership had hoped to be rubberstamped by members, now face a fraught path to passage.

Adding to the organisation’s difficulties is the expected capture of James Schneider by the leader’s office. Schneider, who appears widely on television and radio as the public face of Momentum and is well-liked by journalists, has an offer on the table to join Jeremy Corbyn’s team at Westminster as a junior to Seumas Milne.

The move, while a coup for Corbyn, is one that Momentum – and some of Corbyn’s allies in the trade union movement – are keen to resist. Taking a job in the leader’s office would reduce still further the numbers of TV-friendly loyalists who can go on the airwaves and defend the leadership. There is frustration among the leader’s office that as well as Diane Abbott and John McDonnell, who are both considered to be both polished media performers and loyalists, TV bookers turn to Ken Livingstone, who is retired and unreliable, and Paul Mason, about whom opinions are divided within Momentum. Some regard Mason as a box office performer who needs a bigger role, others as a liability.

But all are agreed that Schneider’s expected departure will weaken the media presence of Corbyn loyalists and also damage Momentum. Schneider has spent much of his time not wrangling journalists but mediating in local branches and is regarded as instrumental in the places “where Momentum is working well” in the words of one trade unionist. (Cornwall is regarded as a particular example of what the organisation should be aiming towards)

It comes at a time when Momentum’s leadership is keen to focus both on its external campaigns but the struggle for control in the Labour party. Although Corbyn has never been stronger within the party, no Corbynite candidate has yet prevailed in a by-election, with the lack of available candidates at a council level regarded as part of the problem. Councilors face mandatory reselection as a matter of course, and the hope is that a bumper crop of pro-Corbyn local politicians will go on to form the bulk of the talent pool for vacant seats in future by-elections and in marginal seats at the general election.

But at present, a draining internal battle is sapping Momentum of much of its vitality. But Lansman retains two trump cards. The first is that as well as being the founder of the organisation, he is its de facto owner: the data from Jeremy Corbyn’s leadership campaigns, without which much of the organisation could not properly run, is owned by a limited company of which he is sole director. But “rolling it up and starting again” is very much the nuclear option, that would further delay the left’s hopes of consolidating its power base in the party.

The second trump card, however, is the tribalism of many of the key players at a local level, who will resist infiltration by groups to Labour’s left just as fiercely as many on the right. As one veteran of both Corbyn’s campaigns reflected: “If those who have spent 20 years attacking our party think they have waiting allies in the left of Labour, they are woefully mistaken”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.