Wednesday, March 24, 2010

Not for the Poor

Brown’s Labour Party is adrift from its supposed political moorings. For a party that is promising to look after the poor, it has lost sight of its basic founding principle. This year's Budget freezes personal tax allowances. It will hit the poorest, especially after the previous Glasgow kiss in his abolition of the 10% personal tax rate band.

Bullet Points, via CCHQ:

Alistair Darling failed to explain in his speech that all personal allowances were frozen at £6,475 in the Budget (Table A4, page 123)

But the latest RPI inflation figure is 3.7% (ONS)

According to the Treasury’s own ready reckoner, the revenue gain to the exchequer from not increasing all tax allowances in line with 3.7% inflation is £2.2 billion in 2010-11 and £2.8 billion in 2011-12;

This is the biggest single tax rise in the Budget;

A 3.7% increase would correspond to a £240 increase in the personal allowance;

At the 20% basic rate of tax this means that the Budget contains a £48 a year stealth tax on every basic rate taxpayer starting in April, or £96 a year for a two earner couple;

This is not usual practice – in previous years personal tax allowances have been increased by more than inflation.

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